![]() ![]() The term "facilitate" generally refers to a cost that, based on the facts and circumstances, is incurred to investigate or otherwise pursue a transaction (see Regs. 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. 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. ![]()
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