Treasury releases ‘FY24 Green Book’ describing Biden’s tax proposals for businesses

Raise the corporate income tax rate to 28%

Tax years beginning after December 31, 2022. 

For tax years beginning before January 1, 2023, and ending after December 31, 2022, the tax rate would equal 21% plus 7% times the portion of the tax year that occurs in 2023.

Increase the excise tax rate on repurchased corporate stock to 4%

Applies to repurchases of stock after December 31, 2022.

Prevent basis shifting by related parties through partnerships

Effective for partnership tax years beginning after December 31, 2023.

Conform definition of ‘control’ with corporate affiliation test

Effective for transactions occurring after December 31, 2023.

Deny losses recognized in liquidation transactions

Applies to distributions after the date of enactment.

Limit tax avoidance through inappropriate leveraging of parties to divisive reorganizations

Effective for transactions occurring after enactment.

However, the new rules would not apply to any distribution pursuant to a divisive reorganization described in a ruling request initially submitted to the IRS on or before the date of enactment (if the request has not been withdrawn and for which a ruling has not been issued or denied in its entirety as of such date).

Tax corporate distributions as dividends

Prevent elimination of E&P through distributions of certain stock with basis attributable to dividend equivalent redemptions 

Date of enactment.

Prevent use of leveraged distributions from related corporations to avoid dividend treatment

Transactions occurring after December 31, 2023.

Treat purchases of hook stock by a subsidiary as giving rise to deemed distributions 

Transactions occurring after December 31, 2023.

Repeal gain limitation for dividends received in reorganization exchanges

Transactions occurring after December 31, 2023.

Revise the global minimum tax regime, limit inversions, and make related reforms 

Revise global minimum tax regime with respect to CFC earnings

The reduction in the Section 250 deduction to 25% would be effective for tax years beginning after December 31, 2022. Other elements of the proposal would be effective for tax years beginning after December 31, 2023.

Limit the deduction for dividends received from non-CFCs

Distributions after the date of enactment.

Reform the treatment of deductions properly allocable to exempt income 

Tax years beginning after December 31, 2023.

Limit the ability of domestic corporations to expatriate

Transactions that are completed after the date of enactment.

Disallow stock losses attributable to foreign income that was taxed at a reduced rate

Applies to dispositions occurring on or after the date of enactment (regardless of whether the deductions under Section 245A, 250 or 965(c) were claimed in tax years prior to such date).

Expand the definition of foreign business entity to include taxable units

Tax years of a controlling US person that begin after December 31, 2023, and annual accounting periods of foreign business entities that end with or are within such tax years of the controlling US person.

Repeal BEAT, adopt the UTPR

Tax years beginning after December 31, 2024.

Repeal FDII (the resulting revenue will be used to encourage R&D)

Tax years beginning after December 31, 2023.

Revise the rules that allocate subpart F income and GILTI between taxpayers

Applies to tax years of foreign corporations beginning after the date of enactment and to tax years of US shareholders in which or with which such tax years of foreign corporations end.

Eliminate exploited mismatch in calculation of E&P of CFCs

Tax years of foreign corporations ending on or after December 31, 2023, and to tax years of US shareholders in which or with which such tax years of the foreign corporations end.

Limit FTCs for sale of hybrid entities

Effective for transactions occurring after the date of enactment.

Restrict deduction of excessive interest of members of a financial reporting group

Tax years beginning after December 31, 2023.

Treat payments substituting for partnership ECI as US-source dividend 

Tax years starting December 31, 2023.

Expand access to retroactive QEF elections

Effective on the date of enactment. It is intended that regulations or other guidance would permit taxpayers to amend previously filed returns for open years.

Reform taxation of fossil fuel income

Tax years beginning after December 31, 2023.

Provide tax credit for onshoring jobs to the United States and remove tax deductions for shipping jobs overseas

Effective for expenses paid or incurred after the date of enactment.

Apply the wash sale rules to digital assets and address related-party transactions 

Tax years beginning after December 31, 2023.

Modernize rules treating loans of securities as tax-free to include other asset classes and address income inclusion 

Tax years beginning after December 31, 2023.

Provide for information reporting by certain financial institutions and digital asset brokers for purposes of exchange of information

Effective for returns required to be filed after December 31, 2025.

Require reporting by certain taxpayers of foreign digital asset accounts 

Effective for returns required to be filed after December 31, 2023.

Amend the mark-to-market rules for traders and dealers to include digital assets 

Tax years beginning after December 31, 2023.

Tax carried interest as ordinary income

Tax years beginning after December 31, 2023.

Require 100% recapture of depreciation deductions as ordinary income for certain depreciable real property

Effective for depreciation deductions taken on Section 1250 property in tax years beginning after December 31, 2023, and sales, exchanges, involuntary conversions, or other dispositions of Section 1250 property completed in tax years beginning after December 31, 2023.

Repeal deferral of gain from like kind exchanges

Effective for exchanges completed in tax years beginning after December 31, 2023.

Impose digital asset mining energy excise tax

Tax years beginning after December 31, 2023. The excise tax would be phased in over three years at a rate of 10% in the first year, 20% in the second, and 30% thereafter.

Impose ownership diversification requirement for small insurance company election

Effective for tax years beginning after December 31, 2023.

Expand pro rata interest expense disallowance for business-owned life insurance

Applies to contracts issued after December 31, 2023. 

Modify rules for insurance products that fail the statutory definition of a life insurance contract

Effective for life insurance contracts under the applicable law as of the day following the date of publication of this FY24 Green Book.

Correct drafting errors in the taxation of insurance companies under the Tax Cuts and Jobs Act of 2017

Capitalization rate of net premiums for group life insurance contracts: 

Effective as if it had been a part of the original TCJA.

International and non-proportional reinsurance lines of business: 

Tax years beginning after December 31, 2023.