Notice 2021-7 provides temporary relief in response to the ongoing COVID-19 pandemic for employers using the automobile lease valuation rule to value an employee’s personal use of an employer-provided automobile for purposes of income inclusion, employment tax, and reporting purposes. If certain requirements are met, employers that are using the automobile lease valuation rule may instead use the vehicle cents-per-mile valuation rule to determine the value of an employee’s personal use of an employer-provided automobile beginning as of March 13, 2020. For 2021, employers may revert to the automobile lease valuation rule or continue using the vehicle cents-per-mile valuation rule provided certain requirements are met.

Section 162(m)(1) of the Internal Revenue Code generally limits to $1,000,000 the allowable deduction for a taxable year for applicable employee remuneration paid by any publicly held corporation with respect to a covered employee. The final regulations provide guidance on the application of §162(m), as amended by section 13601 of Tax Cuts and Jobs Act (the Act). The Act made significant amendments to §162(m), and provided a transition rule applicable to certain outstanding arrangements (commonly referred to as the grandfather rule). The final regulations provide guidance on the amendments made by the Act to the definitions of publicly held corporation, covered employee, and applicable employee remuneration. Additionally, the final regulations provide guidance on the operation of the grandfather rule, including when a contract will be considered materially modified so that it is no longer grandfathered.

26 CFR 1.162-33: Certain employee remuneration in excess of $1,000,000 not deductible for taxable years beginning after December 31, 2017.

This guidance contains proposed regulations to establish a new user fee for authorized persons who wish to request the issuance of IRS Letter 627, also referred to as an estate tax closing letter. Pursuant to the guidelines in OMB Circular A-25, the IRS has calculated its cost of providing the estate tax closing letter to be $67. REG-114615-16.

26 CFR Part 300

This notice provides the optional 2021 standard mileage rates for taxpayers to use in computing the deductible costs of operating an automobile for business, charitable, medical, or moving expense purposes. This notice also provides the amount taxpayers must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that may be used in computing the allowance under a fixed and variable rate plan. Additionally, this notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2021 for which employers may use the fleet-average valuation rule in § 1.61-21(d)(5)(v) of the Income Tax Regulations or the vehicle cents-per-mile valuation rule in § 1.61-21(e).

Beginning of Construction for Sections 45 and 48; Extension of Continuity Safe Harbor for Offshore Projects and Federal Land Projects. The notice extends the Continuity Safe Harbor applicable to the production tax credit for renewable energy facilities under section 45 and the investment tax credit for energy property under section 48 for Offshore and Federal Land Projects. Specifically, the notice provides that if a qualified facility or an energy property construction project is an Offshore or Federal Land Project, the Continuity Safe Harbor is satisfied if a taxpayer places the qualified facility or energy property that is the subject of the project into service by the end of a calendar year that is no more than 10 calendar years after the calendar year during which construction of the project began.

This revenue procedure provides a safe harbor that allows a trade or business that manages or operates a qualified residential living facility to be treated as a real property trade or business solely for purposes of qualifying as an electing real property trade or business under section 163(j)(7)(B) of the Internal Revenue Code.

26 CFR 601.601. Rules and regulations.

(Also Part I, §163(j).)

These final regulations provide guidance under section 274 of the Internal Revenue Code (Code) regarding certain amendments made to section 274 by the Tax Cuts and Jobs Act of 2017 (TCJA). These final regulations address the elimination of the deduction under section 274 for expenses related to certain transportation and commuting benefits provided by employers to their employees. The final regulations provide guidance to determine the amount of such expenses that is nondeductible and apply certain exceptions under section 274(e) that may allow such expenses to be deductible. These final regulations affect taxpayers who pay or incur such expenses.

26 CFR 1.274-13 Disallowance of deductions for certain qualified transportation fringe expenditures; 26 CFR 1.274-14 Disallowance of deductions for certain transportation and commuting benefit expenditures

This Treasury Decision provides final rules regarding the timing of income inclusion for accrual method taxpayers with an applicable financial statement, and the treatment of advance payments resulting from the 2017 enactment of the Tax Cuts and Jobs Act (TCJA). The Treasury Decision provides general rules on the timing of income inclusion, including key definitions and guidance on calculating the amount of the inclusion. The Treasury Decision also provides rules regarding cost offsets that apply in certain contexts.

26 CFR 1.451-3 Timing of income inclusion for taxpayers with an applicable financial statement using an accrual method of accounting.; 26 CFR 1.451-8 Advance payments for goods, services, and certain other items.

This document contains final regulations to implement legislative changes to sections 263A, 448, 460, and 471 of the Internal Revenue Code (Code) that simplify the application of those tax accounting provisions for certain businesses having average annual gross receipts that do not exceed $25 million, adjusted for inflation. This document also contains final regulations regarding certain special accounting rules for long-term contracts under section 460 to implement legislative changes applicable to corporate taxpayers. The final regulations generally affect taxpayers with average annual gross receipts of not more than $25 million (adjusted for inflation).