With competition fierce for attracting and retaining a quality executive team, and stringent new proxy reporting requirements, a well-designed nonqualified plan has never been more important. Although the IRS has issued final regulations that affect all nonqualified plans beginning Jan. 1, 2005, IRS Notice 2007-86 provides for transitional relief until Dec. 31, 2008, giving companies a window of opportunity to amend plans and alter existing elections.

William L. MacDonald and Kenneth A. Kirk, in their article in the Journal of Retirement Planning, explain the conversion from a defined corporate pay-as-you-go SERP plan to the Executive Roth Plan.

In DaimlerChrysler v. Cuno (2006), the United States Supreme Court affirmed that, in all but narrow circumstances, plaintiffs cannot rely on their status as state taxpayers to show standing to challenge state expenditures of tax dollars. The court had long held that federal taxpayers lacked so-called standing, and Cuno stated that this logic “applies with undiminished force to state taxpayers.” 

In an article in Corporate Business Taxation Monthly, Douglas R. Cole shows how the bar has been raised for state taxpayers challenging state expenditures in the post-Cuno world as he details a lower court case, Araki, et al. v. Lingle, that has similarly ratcheted up the standard for taxpayer standing.

Many tax managers and tax lawyers have recently been focusing attention on migrating intellectual property assets to a low tax jurisdiction and the proper method of arriving at a reasonable arm’s length price for the transaction. Often, an attempt is made to minimize the value of those intellectual property assets to minimize taxes on the actual transfer. However, a low valuation could be harmful when trying to establish a high reasonable royalty rate in infringement litigation. 

In an article in Taxes — The Tax Magazine, Tamsen Valoir explains how - complete with a checklist - to migrate such property to low tax jurisdictions while retaining the value of the assets by accommodating the intellectual property rules in the various jurisdictions.

States are increasingly using their taxing agencies as major revenue-producing departments, as opposed to one of assuring compliance with the laws, resulting in some skewed statistical sampling during sales tax audits. Rather than using the more fair method, a blind sample, tax collectors are isolating certain types of transactions — particularly sales taxable transactions — in their sampling.

In an article in the Journal of State Taxation, Rocky Cummings insists that taxpayers must take an active role in designing a fair sampling plan at the beginning of every audit engagement in order to avoid inaccurate or unfavorable results.

When a foreign subsidiary becomes unprofitable or worthless, a foreign holding can be disadvantageous as it often prevents the U.S. parent from taking an ordinary loss on the worthlessness of the foreign subsidiary under Code §165(g)(3). Issues arise as to how related-party or parent-guaranteed debt should be factored into the analysis of whether a foreign subsidiary is worthless or subject to the liquidation rules of Code §165(g)(3). 

In an article in International Tax Journal, Douglas L. McHoney and J. Michael Cornett explain how three recent administrative rulings and a proposed regulation apply to this and other difficult questions.