IRS Establishes Safe Harbor Election for Allocating Success-Based Fees Paid On Certain Business Transactions


The Internal Revenue Service is establishing a new safe harbor that businesses may elect to use when allocating success-based fees paid in connection with a business organization under Treasury Regulation § 1.263(a)-5(e)(3) of the Income Tax Regulations. 

IRS Establishes Safe Harbor Election for Allocating Success-Based Fees Paid On Certain Business Transactions

The Internal Revenue Service is establishing a new safe harbor that businesses may elect to use when allocating success-based fees paid in connection with a business organizsatoin under Treasury Regulation § 1.263(a)-5(e)(3) of the Income Tax Regulations. 

Revenue Procedure 2011-29 will be published in Internal Revenue Bulletin 2011-18 on May 2.  It will provide that in lieu of maintaining the documentation required by § 1.263(a)-5(f), electing taxpayers may elect to treat 70 percent of the success-based fee as an amount that does not facilitate the transaction. The remaining portion of the fee must be capitalized as an amount that facilitates the transaction.

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©2011 Cynthia Marcotte Stamer.  Non-exclusive right to republish granted to Solutions Law Press.  All other rights reserved.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on health care, human resources, employee benefits, data security and privacy, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile at here or e-mailing this information here.

©2011 Cynthia Marcotte Stamer.  Non-exclusive right to republish granted to Solutions Law Press.  All other rights reserved.

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About Cynthia Marcotte Stamer

Management attorney and operations consultant Cynthia Marcotte Stamer uses a client objective oriented approach to help businesses, governments, associations and their leaders manage performance, operations and risks.
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