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! ! Taxes DH~$ 85 [ 14 Review July 9 1995 In addition, Mr. Batten emphasized the importance of execution and the attention to detail. Success in any enterprise, he claims, is the result many, many small things done extremely well. August I deadline for notifying employees of no withholding on fringe benefits Last month, President Reagan signed new legislation substantially relax- ing the controversial "contemporaneous" recordkeeping requirements, for bJs- iness use of cars and other property, which were included in the 1984 Tax Act. The 1984 Act also required employers to withhold tax on noncash fringe benefits (e.g., personal use of ap employer-owned car) provided to employees. The new law provides that an employer can elect not to withhold income tax (as opposed to F ICA) on such benefits if the employer notifies the employee in writing and includes the taxable amount of the fringe benefit in the employee's Form W-2 for the year. The IRS has just announced that employers have until August 1 to make the notification of election to their employees, and that it will issue guidelines soon for reporting and withholding on taxable fringe benefits. IRS will rule on certain property transfers to foreign affiliates In general, gain must be recognized when a U.S. person transfers prop- erty to a foreign corporation in a type of transaction that is otherwise tax-free (e.g., a reorganization). An exception is provided for transfers of certain property for use by the foreign corporation in the active conduct of a business outside the U.S., unlessthe IRS provides to the contrary in regulations. The IRS has announced that since regulations have not yet been iSsL~ed and there is an urgent need for guidance, it will entertain ruling requests in this area. In considering whether to issue rulings in response to such requests, the IRS will apply certain principles, including the following: · Prior ruling practice will govern (1) whether the assets transferred are to be used in the active conduct of a business outside the U.S., arid (2) in cases involving the transfer of stocks or securities. As to the latter, a closing agreement may be required. · Rulings will not be issued with respect to the transfer of intangib:es, foreign currency, receivables, inventory, copyrights and certain leased property. Also, there will be no ru lings on the recapture of deductions involving [he transfer of depreciable property or the recapture of losses of foreign branches. The IRS has not indicated when regulations on this subject will be released.