Under this provision, a transaction is broadly defined to include acquisitions of the stock or assets of a trade or business, reorganizations or restructurings, borrowings, stock issuances, and changes to a company's capital structure. In general, taxpayers must capitalize costs that "facilitate" a transaction described in Regs. Therefore, taxpayers and practitioners should review the guidance and consider it when determining and substantiating the tax treatment of transaction costs. Although the practice unit is designed to provide IRS personnel with technical and procedural guidance in auditing transaction costs and may not be relied upon as legal authority, it nonetheless provides helpful insight regarding the approach and positions the IRS is likely to take on exam. The tax rules governing the treatment of these costs are complex, generally do not follow book treatment, and may require an extensive, facts- and- circumstances analysis to meet the subjective technical requirements and extensive documentation standards.Ĭonsequently, the area has historically generated significant uncertainty and IRS controversy. Taxpayers often incur millions of dollars in professional and advisory fees paid to bankers, attorneys, accountants, and other service providers in connection with corporate transactions. federal income tax treatment of transaction costs incurred in certain business transactions. Green Open Access added to TU Delft Institutional Repository 'You share, we take care!' - Taverne project Otherwise as indicated in the copyright section: the publisher is the copyright holder of this work and the author uses the Dutch legislation to make this work public.The IRS's Large Business and International Division in 2018 released a practice unit, "Examining a Transaction Costs Issue" (available at regarding the U.S. In addition, GB policy recommendations for Hong Kong are proposed and many of which are relevant to other countries.Įnergy Policy, 119, 563-573 Bibliographical note These empirical evidences are helpful for policy-makers and practitioners to better understand the impacts of TCs, so as to improve the effectiveness of future incentive schemes. Interviews were conducted with 20 industry experts to validate TCs types and determinants, and to gauge the magnitude of TCs borne by different stakeholders. As TCs are policy context-specific, this paper takes a popular GB incentive scheme, Gross Floor Area (GFA) Concession Scheme, as an example. It would identify TC typologies and determinants, and TCs measurement and allocation to different stakeholders. This study aims to improve the efficiency of GB incentives through analyzing TCs borne by the private sector stakeholders. The lack of such in-depth analysis tends to make incentive-design ignore efficiency and fairness amongst the stakeholders. These include TC typology and determinants during the implementation process, especially the extra administration process where TCs possibly may be incurred. However, few studies have empirically applied TC analysis to GB incentives, which normally should have analyzed the TCs borne by different stakeholders. It is claimed that transaction costs (TCs) affect the effectiveness of any green building (GB) policy. Qian, QK (TU Delft OLD Housing Quality and Process Innovation) Transaction costs (TCs) in green building (GB) incentive schemes: Gross Floor Area (GFA) Concession Scheme in Hong Kongįan, Ke (The Hong Kong Polytechnic University)Ĭhan, Edwin H.W.
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