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401(k)s and Layoffs • Small Business Deduction Hurdles

March 22, 2020, 2:01 PM

This is a weekend roundup of Bloomberg Tax Insights, which are written by practitioners featuring expert analysis on current issues in tax practice and policy. The articles featured here represent just a handful of the many Insights published each week. For a full archive of articles, browse by jurisdiction at Daily Tax Report, Daily Tax Report: State, and Daily Tax Report: International.

This week we look at 401(k)s in a time of job losses and furloughs; the new forms for the Section 199A deduction; unilateral digital taxes driving multilateral progress; the effect of transfer pricing litigation on regulatory action; retirement plan portfolio risk; cross-border relocations to Switzerland; and the first U.K. 2020 budget. We’ll hear from:

  • Dan Morgan of Blank Rome on employer 401(k) concerns with furloughs and layoffs
  • Matthew Lay of Deloitte Tax on the not-so-simplified forms to take the Section 199A small business deductions
  • Vidushi Gupta of the Vidhi Center for Legal Policy on unilateral tax measures motivating multilateral international tax consensus
  • Harvey Poniachek of Rutgers Business School on the IRS’s losses in transfer pricing disputes leading to regulatory changes
  • William K.S. Wang of U.C. Hastings College of Law on risk aversion in retirement portfolios
  • Silvia Zimmermann and Jonas Sigrist of Pestalozzi Attorneys on the tax rules for cross-border relocations to Switzerland
  • Paul Falvey of BDO on the business tax measures in the U.K. budget
A worker cleans a table in front of a Starbucks at Rockefeller Center as it sits closed in the wake of Covid-19.
Photo by Victor J. Blue/Getty Images

The coronavirus pandemic will generate much economic disruption. Dan Morgan of Blank Rome outlines planning and operational concerns regarding 401(k) plans for employers facing furloughs and layoffs. Read: 401(k) Plans During the Covid-19 Pandemic

Remember the promise of simplified tax forms for individuals? It didn’t quite work out that way for individuals (and trusts and estates) qualifying for the deduction under tax code Section 199A. Matthew Lay of Deloitte Tax walks through the new forms and reporting requirements to take the deduction for the 2019 tax year. Read: 2019 Forms Impose New Reporting Requirements Under Section 199A

In lieu of a multinational agreement to tax the digital economy, many jurisdictions are considering or have adopted unilateral measures. Vidushi Gupta of the Vidhi Center for Legal Policy says such measures may be driving rather than hindering progress toward a global consensus. Read: Unilateral Measures and the Quest for a Globally Agreeable Digital Tax

The government’s wins and losses in recent transfer pricing litigation highlight what arguments are working for taxpayers. Harvey Poniachek of Rutgers Business School sees the generally unfavorable results for the government as motivating regulatory changes that are designed to provide greater clarity in intercompany pricing practices and reduce controversy between taxpayers and the IRS. Read: Transfer Pricing Disputes and Litigation—Main Issues and Implications

Many people believe that they are reducing risk in their portfolios by investing in fixed-income securities. In the final part of a four-part series on retirement accounts, William Wang of U.C. Hastings College of Law demonstrates why, with the proper definition of “risk,” “risk”-aversion should cause a high percentage, possibly 100%, in stocks in a portfolio (both retirement and non-retirement accounts) prior to retirement and perhaps a major portion in equities even after retirement. Read: Why ‘Risk’ Aversion Should Cause a High Percentage in Stocks

Silvia Zimmermann and Jonas Sigrist of Pestalozzi Attorneys consider the tax rules for cross-border re-locations to Switzerland in the context of the Swiss corporate tax reform. Read: Tax Rules Relating to Cross-Border Relocations to Switzerland

Paul Falvey of BDO LLP discusses the tax measures announced in the U.K. budget that will directly affect companies. Read: Business Tax Measures in the First U.K. 2020 Budget

From the Archive

Bloomberg Tax contributors keep us up to date on potential 401(k) pitfalls for employers and what the IRS is doing.

Sometimes the IRS makes life easier. Jorge Leon, Jason Faust, and Julia Mader of Michael Best walked through the changes to the IRS programs that allow employee retirement plan sponsors to self-correct certain plan document and operational failures, including defaulted loans to employees.

Unfortunately, in times of crisis, fraudsters are the most active. Debra Mackey of Burr & Forman highlighted a pending lawsuit against a 401(k) plan sponsor, administrator, and related parties for unauthorized distributions from a participant’s account totaling more than $99,000.

Beyond Tax

What’s happening outside the world of tax?

High-volume times of year like tax season and work related to the new coronavirus create opportunities for cyberattacks on law firms. Mimecast’s Garth Landers examines cyber risks facing the legal sector and how the industry is overcoming technology challenges to strength data storage, discovery, cyber security, and resilience. Read: Tax Season & Covid-19—Peak Time for Law Firm Cyber Threats

The Supreme Court ruled that posting 401(k) plans online won’t allow companies to shorten the time period participants have to sue for a breach of fiduciary duty and “actual knowledge” determines the litigation window. Saul Ewing Arnstein & Lehr LLP’s Michael J. Joyce examines takeaways, including extending fiduciary liability and how technology will be paramount in establishing actual knowledge. Read: Supreme Court ERISA Ruling Gives Tech a Boost as Evidentiary Tool

Corporate legal departments and law firms looking to save costs and increase value are using contract attorneys—a segment of the alternative legal service provider industry whose revenues are estimated to reach nearly $20 billion by 2025. Major, Lindsey & Africa’s Matthew Wheatley looks at the plus side of using contract attorneys. Read: Fitting Contract Attorneys Into Your Long-Term Strategy

Ellen McCarthy, a vice president at Swiss Re Corporate Solutions who has spent nearly two decades teleworking, offers essential guidance for attorneys and any others finding themselves now working from home. Read: Teleworking Tips During a Crisis—Know When to Walk Away

The new coronavirus pandemic is impacting commercial property owners in unprecedented ways, such as supply and demand shocks, quarantines, and event cancellations. Thompson Hine’s Patrick Abell discusses key issues, including public safety, insurance coverage, tenant relationships, and myriad federal, state, and local regulations. Read: Coronavirus Challenges Facing Commercial Property Owners

Today’s general counsel needs to partner with the CEO and advise on more than just legal matters. Nathan Wenzel, founder of SimpleLegal, says GCs are expected to be strategic business partners, analysts, and budget managers, and offers tips on how to achieve these goals. Read: How GCs Can Evolve From ‘Lawyer in the Room’ to Strategic Business Partner

Law school graduates will accumulate an average of over $140,000 in debt for their undergraduate and law school studies, and some law schools have reported costs exceeding $100,000 annually. Peter B. “Bo” Rutledge, dean of the University of Georgia School of Law, examines the ever-escalating costs and and explains his school’s three-part strategy for dealing with it. Read: Bending (and Breaking) the Cost Curve of Legal Education

The NCAA faces criticism for its policies on student-athlete compensation and transfer eligibility. Mintz attorneys examine California’s new law that allows for endorsements and conflicts with NCAA rules, how other states and Congress are considering similar laws, and litigation to watch in 2020. Read: A Crescendo of Calls for Student-Athletes’ Right to Play and Get Paid

Exclusive Content for Bloomberg Tax Subscribers

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Gary Sprague of Baker McKenzie analyzes the OECD’s Feb. 13 webcast on the status of the development of an impact assessment of the anticipated tax collections and economic consequences of the proposed Pillar 1 and Pillar 2 revisions to the international tax framework.

Bloomberg Tax Insights articles are written by experienced practitioners, academics, and policy experts discussing developments and current issues in taxation. To contribute please contact Erin McManus at emcmanus@bloombergtax.com.

To contact the reporter on this story: Erin McManus in Washington at emcmanus@bloombergtax.com

To contact the editors responsible for this story: Rachael Daigle at rdaigle@bloombergtax.com; Kathy Larsen at klarsen@bloombergtax.com

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