Keywords: GRA, gain recognition agreement, compliance, wilful standard, taxpayer

Since 1986, the U.S. Treasury Department regulations promulgated under section 367(a) of the Internal Revenue Code have provided a reasonable cause exception for gain recognition agreement ("GRA") compliance failures. On January 31, 2013, the IRS and the U.S. Treasury Department issued proposed regulations under section 367(a) that would replace the reasonable cause standard for gain recognition agreements' compliance failures with a willful standard. Importantly, under the new willful standard, "available upon request" GRAs will be considered willful in the first instance. This puts significant pressure on taxpayers with outstanding "available upon request" GRAs. If taxpayers have not yet cured these, action should be taken before the proposed regulations are issued in final form.

In the attached article, Tax Transactions & Consulting partner Lewis J. Greenwald and associate Jared B. Goldberger discuss how proposed regulations will affect taxpayers with outstanding "available upon request" GRAs.

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Originally published September 16, 2013

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