United States: Corporate Tax

Proposed IRS regulations would significantly simplify dependent care assistance program (DCAP) nondiscrimination testing by excluding employees who receive no benefits from the 55% average benefits test. This participant-only approach should reduce testing failures and the need for employers to cap highly compensated employees’ elections.

The CHIPS and Science Act's Section 48D offers a 35% tax credit for semiconductor manufacturing investments, but construction must begin by December 31, 2026. Taxpayers can establish construction through physical work or the 5% safe harbor method, with final regulations clarifying that qualifying property on contiguous land may be included if integral to operations.

Partner Lauren Azebu examines the qualified small business stock (QSBS) gain exclusion rules under Section 1202, exploring the complexities that arise when QSBS is held through pass-through entities. The article analyzes technical issues including ownership limitations, transfer restrictions, and entity conversion strategies, while highlighting areas where guidance remains limited and emphasizing the importance of proactive planning.

The Illinois Department of Revenue has released draft proposed regulations implementing the Illinois Digital Asset Tax Act, a first-in-the-nation tax on certain digital asset transactions that takes effect January 1, 2027, at a rate of 0.2 percent of the value of the digital asset involved in the transaction.

The IRS is intensifying scrutiny of federal R&D tax credit claims under Section 41, with recent Form 6765 changes giving examiners unprecedented visibility into credit details. Court decisions have reinforced that audit outcomes hinge on the quality and alignment of company records with IRS requirements, making documentation and preparation critical for companies with substantial credits at stake.

On September 3, 2026, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) issued proposed regulations under Section 501(c)(3) that could materially affect private education in the United States. The proposal would apply a broad nondiscrimination standard based on race, color and national or ethnic origin, with significant implications for private schools, colleges and universities seeking or maintaining tax-exempt status under Section 501(c)(3).

The U.S. Department of Treasury has issued guidance on employer-sponsored Trump Account contribution programs, creating new tax-advantaged opportunities for employers to support employee savings for their children's future. Employers must navigate complex requirements analogous to dependent care assistance programs, including nondiscrimination rules, written plan documents, and compliance obligations under both the Internal Revenue Code and potentially ERISA. What are the key design considerations, tax impl

The California Department of Tax and Fee Administration (CDTFA) has released draft regulatory language it is considering proposing, offering its first comprehensive view of how it may administer Senate Bill 122, California's expansion of sales and use tax to software as a service (SaaS) and certain digital products beginning January 1, 2027. CDTFA has not yet formally proposed these regulations through the emergency rulemaking process.

Companies that invest in innovation can leverage the federal research and development tax credit under Section 41 of the Internal Revenue Code to offset costs. However, the qualification rules and substantiation requirements are complex, and errors can trigger IRS disputes that transform this valuable benefit into a costly examination.