Specific Industries

Agricultural Chemicals Security Credit

• Rollout: November 3, 2017
• IPB Contact: Jamie Brown or Jeff Moeller
• LB&I summary: The Agricultural chemicals security credit is claimed under Internal Revenue Code Section 450 and allows a 30 percent credit to any eligible agricultural business that paid or incurred security costs to safeguard agricultural chemicals. The credit is nonrefundable and is limited to $2 million annually on a controlled group basis with a 20-year carryforward provision. In addition, there is a facility limitation as outlined in Section 450(b). The goal of this campaign is to ensure taxpayer compliance by verifying that only qualified expenses by eligible taxpayers are considered and that taxpayers are properly defining facilities when computing the credit. The treatment stream for this campaign is issue-based examinations.

Deferred Variable Annuity Reserves & Life Insurance Reserves IIR

• Rollout: January 31, 2017
• IPB Contact: Les Schneider or Pat Smith
• LB&I summary: The IRS and Chief Counsel have agreed to accept the Deferred Variable Annuity Reserves and Life Insurance Reserves issues into the IIR program (pursuant to Rev. Proc. 2016-19) to develop guidance to address uncertainties on issues important to the Life Insurance Industry. The issues include amounts to be taken into account in determining tax reserves for both deferred variable annuities with Guaranteed Minimum Benefits, and Life Insurance contracts. The campaign's objective is to collaborate with industry stakeholders, Chief Counsel and Treasury to develop published guidance that provides certainty to taxpayers regarding these related issues.

Domestic Production Activities Deduction, Multi-Channel Video Program Distributors (MVPD’s) and TV Broadcasters

• Rollout: January 31, 2017
• IPB Contact: Les Schneider or Pat Smith
• LB&I summary: Multi-channel Video Programing Distributors (MVPDs) and TV Broadcasters often claim that “groups” of channels or programs are a qualified film eligible for the IRC Section 199 deduction. Taxpayers are asserting that they are the producers of a qualified film when distributing channels and subscriptions packages that often include third-party produced content. Additionally, MVPD taxpayers maintain that they provide online access to computer software for the customers’ direct use (incident to taxpayers’ transmission activities, including customers’ use of the set-top boxes). LB&I has developed a strategy to identify taxpayers impacted by these issues and will develop training to aid revenue agents in examining them. The treatment streams for this campaign include the development of an externally published practice unit, potential published guidance, and issue based exams, when warranted.

Energy Efficient Commercial Building Property

• Rollout: November 3, 2017
• IPB Contact: Jamie Brown, Heléna Klumpp or Jeff Moeller
• LB&I summary: The Energy Efficient Commercial Building Deduction (Section 179D) allows taxpayers who own or lease a commercial building to deduct the cost or portion of the cost of installing energy efficient commercial building property (EECBP). If the equipment is installed in a government-owned building, the deduction is allocated to the person(s) primarily responsible for designing the EECBP. This goal of this campaign is to ensure taxpayer compliance with the section 179D deduction. The treatment stream for this campaign is issue-based examinations.

IRC 48C Energy Credit

• Rollout: January 31, 2017
• IPB Contact: Jamie Brown, Heléna Klumpp or Jeff Moeller
• LB&I summary: This campaign ensures that only those taxpayers whose advanced energy projects were approved by the Department of Energy, and who have been allocated a credit by the IRS, are claiming the credit. These credits must be pre-approved through extensive application to the DOE. The treatment stream for this campaign will be soft letters and issue-focused examinations
• Relevant LB&I Practice Units: “Examining the Qualifying Advanced Energy Project Credit” (April 30, 2018).

Land Developers - Completed Contract Method (CCM)

• Rollout: January 31, 2017
• IPB Contact: Les Schneider or Pat Smith
• LB&I summary: Large land developers that construct in residential communities may be improperly using the Completed Contract Method (CCM) of accounting. A developer, whose average annual gross receipts exceed $10 million, may only use the CCM under a home construction contract. In some cases, developers are improperly deferring all gain until the entire development is completed. LB&I will provide training for revenue agents assigned to work this issue. The treatment stream includes development of a practice unit, issuance of soft letters, and follow-up with issue-based examinations when warranted.

Relevant LB&I Practice Units: “Land Developers and Subcontractors—Proper Method of Accounting” (October 17, 2017).