Posts Tagged ‘Trump’

Tax Roundup, 2/26/16: Gronstal hints at approach to Section 179 coupling deal. And: Yes he can! (Release his returns)

Friday, February 26th, 2016 by Joe Kristan

couplingInteresting, if true. In opening hostage negotiations over the fate of Section 179 coupling, Iowa Senate Majority Leader Gronstal may have hinted at a “Main Street vs. Walnut Street” approach. From wcfcourier.com:

If the choice is between offering tax relief to a limited number of manufacturers “or taking care of 30,000 farmers, 25,000 small businesses,” Gronstal said he would “gravitate more toward the 50,000 or 60,000 effort to help those folks (rather) than something that is much more narrow in terms of its impact.”

I say “may have” because I think he is hinting at trying to get the Governor to reverse its regulatory change to sales tax rules on manufacturing supplies.

By “Walnut Street,” I refer to downtown Des Moines, where several of the big law/lobbying firms in town have their offices (Nothing against Walnut Street — that’s where Tax Update World Headquarters is located, too).  Whether or not Sen. Gronstal realizes it, the coupling issue is ultimately about whether to benefit a handful of insiders and big companies benefitting from special tax benefits, or whether to further the interests of the rest of the taxpayers who pay for any special deals.

The revenue cost from adopting the $500,000 Section 179 limit for Iowa is estimated around $90 million. Eight taxpayers by themselves claimed $35 million in research credits in 2015, of which around $30 million were paid to the companies in cash because they exceed the claimants income tax bills. Just last week the state promised $15 million to DuPont as a location incentive. The potential loss of Section 179 deduction is making its many beneficiaries suspicious of the multi-million dollar “economic development” tax credits that benefit relatively few insiders with lobbyists.

Walnut Street back in the day.

Walnut Street back in the day.

While Senator Gronstal will insist on concessions for passing the bill, I expect he will reach a deal without insisting on his full pound of flesh. More than anything else, he wants to remain Majority Leader, with control over whether legislation lives or dies. He has only 26-24 control of the Senate. If he is perceived as blocking coupling, it may be just enough to tip a close race or two against his party. I think his reference to the “50,000 or 60,000” shows he’s aware of this. That’s why I think an agreement to couple with the federal limit is now likely in the next two or three weeks. I have no insider information to confirm this guess.

Related: Me, Tax season impasse: why your 2015 Iowa tax return may be on hold. My new post at IowaBiz.com, the Des Moines Business Record Business Professional’s Blog.

Other coverage: Des Moines Register, Gronstal opens door to Iowa tax-coupling deal

 

Yes he can! Trump says he can’t release tax returns because he’s being audited (marketwatch.com). That’s not true, of course. While it’s illegal to release someone else’s returns without their permission, you can make your own returns public any time. The IRS doesn’t make you sign some sort of confidentiality agreement when they audit you.

Like every other silly thing he says, this probably will probably increase his standing in the polls.

Related: TaxGrrrl, Trump Won’t Release Tax Returns, Citing IRS Audit: Is It A Legitimate Excuse? “Trump could absolutely release those returns now – even in the middle of an audit.”

 

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Tony Nitti, Beachbody Coach? Rodan & Fields Consultant? At Tax Time, Beware The Hobby Loss Rules. “If your Facebook feed is anything like mine, videos of clumsy toddlers and unlikely animal pals have recently given way to a relentless string of friends pushing side businesses.”

Kay Bell, Penalty for late tax filing increases in 2017. “Starting in 2017, if you send in your Form 1040 (and additional forms and schedules) more than two months after the return is due, you’ll be slapped with a penalty of $205 or 100 percent of your due tax, whichever amount is smaller.” Another example of the ugly practice of funding the government through penalties instead of taxes.

Keith Fogg, Discharging the Failure to File Penalty in Bankruptcy (Procedurally Taxing).

Somehow I missed this: WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’ – SPECIAL TAX SEASON EDITION (Robert D. Flach). “An unprecedented tax season BUZZ!  Some good stuff that needs to be spread around now – and could not wait until April.”

Andrew Mitchel, Charts of Examples in Rev. Proc. 91-55: Form 5472 & Direct and Ultimate Indirect 25% Shareholders. A big issue when you have foreign owners of a U.S. corporation.

Robert Wood, Kanye West Could Still Get $1 Billion Tax Free. Why?

Jim Maule, Section 280A and the Tree House. “The reader asked, ‘Can a tree house qualify under the Section 280A rules? Can a tree house be depreciated?’ Though there’s no direct authority, careful reading of the applicable statute provides an answer.”

Party on Walnut Street.

Party on Walnut Street.

 

TaxProf, The IRS Scandal, Day 1023

Renu Zaretsky, Times get taxing for candidates… Today’s TaxVox headline roundup covers last night’s debate, candidate tax returns, and the lost credibility of the IRS under Shulman and Koskinen.

 

News from the Profession. Password Inundation: Password Policies We Love to Hate (Megan Lewczyk, Going Concern).

 

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Tax Roundup, 9/30/15: Taking from rich doesn’t give to the poor; state incentives favor the big.

Wednesday, September 30th, 2015 by Joe Kristan

Today we have two instances where policy tanks that I usually disagree with make important tax policy points.

TPC logoFirst, The center-left Tax Policy Center, a project of the Brookings Institution (which I castigate below), makes an important observation about the overrated problem of income inequality in their paper, Would a significant increase in the top income tax rate substantially alter income inequality? The summary (my emphasis):

The high level of income inequality in the United States is at the forefront of policy attention. This paper focuses on one potential policy response: an increase in the top personal income tax rate. We conduct a simulation analysis using the Tax Policy Center (TPC) microsimulation model to determine how much of a reduction in income inequality would be achieved from increasing the top individual tax rate to as much as 50 percent. We calculate the resulting change in income inequality assuming an explicit redistribution of all new revenue to households in the bottom 20 percent of the income distribution. The resulting effects on overall income inequality are exceedingly modest.

I have zero hope that politicians will heed this. Just because you take from the rich doesn’t mean it goes to the poor. It goes to the well-connected, as in the next item.

Second, the not-so-center-left Good Jobs First takes the side of the angels in the battle against state tax incentives, with a survey of small businesses called In Search of a Level Playing Field:

A national survey of leaders of small business organizations reveals that they overwhelmingly believe that state economic development incentives favor big businesses, that states are overspending on large individual deals, and that state incentive programs are not effectively meeting the needs of small businesses seeking to grow. 

I think they have this exactly right. It’s not start-ups that get the big deals from the legislature and the Economic Development bureaucrats. It’s the well-connected and wealthy companies that know how to work the system. The rest of us get to pay for it.

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Related: LOCAL CPA FIRM VOWS TO SWALLOW PRIDE, ACCEPT $28 MILLION

 

Jason Dinesen, The Iowa School Tuition Organization Tax Credit. “Iowa offers dozens of obscure tax credits. The one I get asked about most is the tax credit available for donations to a ‘school tuition organization’ or STO.”

Kay Bell, Maryland issuing court-ordered county tax credit refunds. If you don’t want to repay illegal taxes, don’t collect illegal taxes.

Russ Fox, How to Wynne Your Money Back in Maryland

Paul Neiffer, IRS Provides List of Counties Eligible For Additional Extension on Livestock Replacement

Jim Maule, Taxation of Prizes, Question Two. He quotes a post from a sweepstakes message board:

 I won concert VIP tickets, there is no value on the tickets, so I can’t sell them. If no value is on them, why am I paying taxes on them? 

Mr. Maule explains that there is a value. If there isn’t, then why didn’t the winner give them away?

Robert D. Flach, WON’T YOU TAKE THIS ADVICE I HAND YOU LIKE A BROTHER: MY BEST TAX ADVICE FROM OVER 40 YEARS’ EXPERIENCE PREPARING 1040s.

 

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InsureBlog, Yes, The New York Obamacare Co-op [squandered*] $340 Million. *The actual headline uses a more colorful term.

Robert Wood, Hillary Backs Cadillac Tax Repeal

 

TaxProf, The IRS Scandal, Day 874. Today’s edition features IRS agents abusing their power on everyday taxpayers. But we can trust them to regulate their tax preparer adversaries, right?

Arnold Kling, Hypocrisy and Cowardice at Brookings. Arnold addresses the firing by the Brookings Institution of Robert Litan, a scholar accused by Senator Elizabeth Warren of “writing a research paper to benefit his corporate patrons.” He is appalled:

1. Robert Litan is one of the most decent individuals in the whole economics profession.

2. Giving Litan’s scalp (sorry for the pun) to Elizabeth Warren does nothing to bolster the integrity of Brookings. It amounts to speaking cowardice to power.

There’s more. The episode is appalling, and it shows the totalitarian tendencies that are barely beneath the surface of Senator Warren’s populism.

 

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Alan Cole, Donald Trump’s Tax Plan Will Not Be Revenue-Neutral Under Any Circumstances (Tax Policy Blog)

Jeremy Scott, Trump’s Tax Plan Is Pretty Much GOP Orthodoxy (Tax Analysts Blog)

Matt Gardner, How Donald Trump’s Carried Interest Tax Hike Masks a Massive Tax Cut for Wealthy Money Managers (Tax Justice Blog)

Peter Reilly, Trump Tax Plan Would Increase Deficit By Over $10 Trillion

Tony Nitti, Love Trump, Hate Romney, But Their Tax Plans Are One And The Same

Renu Zaretsky, Thirty days, goodbye September, shutdown talks—maybe in December. Today’s TaxVox headline roundup covers shutdown politics, plans to use reconciliation procedures to pass bills repealing pieces of Obamacare, and tax Trumpalism.

 

See you at Hoyt Sherman Place tonight!

 

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Tax Roundup, 8/25/15: Capital losses, your portfolio disaster silver lining. And: Introducing Toby Miles!

Tuesday, August 25th, 2015 by Joe Kristan
Flickr Image courtesy donjd2 under Creative Commons License.

Flickr Image courtesy donjd2 under Creative Commons License.

So how’s the market doing? Recent days have been unkind to many stock portfolios. Can you make tax lemonade out of the sour lemons in your portfolio?

Let’s make clear that I am in no way saying you should sell your losing stocks right now. If I were smart enough to call the market, you wouldn’t find me doing tax returns in Des Moines in January, as lovely as it is. But I can explain what stock losses do to your income taxes, and how to do it.

First, tax losses are generally useful only when they occur in a taxable account. If your IRA or 401(k) portfolio takes a hit, you are normally out of luck.

Second, you have to actually sell the losing stock to deduct a loss. Just as you don’t pay taxes on appreciated stocks you don’t sell, you don’t get to deduct losses on shares you don’t cash out.

Third, you can’t buy back the shares you sell at a loss for 30 days, under the “wash sale” rules. So if you think that loser is going to bounce back right away, you can’t just buy back other shares of the same stock you sold at a loss if you want the deduction. Nor can you buy the other shares of the same stock in the 30 days before you take the loss. The IRS says buying the offsetting shares in a nontaxable IRA account also triggers wash-sale disallowance.

Finally, individuals may only deduct their capital losses to the extent of capital gains (long-term or short-term), plus $3,000 ($1,500 for married-filing-separately taxpayers). That means you get no tax benefit from overdoing taking losses; the excess of losses of $3,000 carries forward to offset future taxable gains.

But if you have cashed out gains already in your taxable portfolio, it may make sense to sell enough losers to offset the gain, if you have them. Otherwise, you are in effect paying tax on the gains voluntarily — assuming you can live without the loser stock for 30 days.

Related:

TaxGrrrl, As Stocks Tumble, Understanding When A Loss Isn’t Really A Loss

IRS.gov, Topic 409 – Capital Gains and Losses

 

 

Toby Miles, IRS.

Toby Miles, IRS.

TaxProf, The IRS Scandal, Day 838. Today’s installment links to revelations of another Lois Lerner personal account used to conduct official business:

“In addition to emails to or from an email account denominated ‘Lois G. Lerner‘ or ‘Lois Home,’ some emails responsive to Judicial Watch’s request may have been sent to or received from a personal email account denominated ‘Toby Miles,’” Mr. Klimas told Judge Emmet G. Sullivan, who is hearing the case.

It is unclear who Toby Miles is, but Mr. Klimas said the IRS has concluded that was “a personal email account used by Lerner.”

The linked Washington Times story also has this:

The use of secret or extra email accounts has bedeviled the Obama administration, which is has tried to fend off a slew of lawsuits involving former Secretary of State Hillary Rodham Clinton and her top aides, the White House’s top science adviser, top Environmental Protection Agency officials and the IRS.

That’s not quite right. It’s not the use of the email accounts that has “bedeviled” the administration. Enough have come to light to make clear that such use is standard operating procedure. It’s the getting caught that does the bedeviling.

 

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Paul Neiffer, IRS Delays New Inherited Property Reporting Requirements Until February 2016. Statements showing the basis of inherited property will not have to be filed with the IRS before the end of February, 2016, at the earliest.

Russ Fox, How to Commit Tax Fraud 101. “Until the IRS makes it far more difficult for the fraudsters, this epidemic will continue. As I’ve said, why rob banks?”

Robert D. Flach, TRY TO REMEMBER . . . End of summer tips on home mortgage interest, alternative minimum tax, and more.

Robert Wood, 10 Ways Trump Is Right About Taxes. When you say random things without regard to other random things you’ve already said, you are likely to be right occasionally. Unlike Mr. Wood, I think the “hedge fund loophole” talk is foolish nonsense.

Kay Bell, Trump trashes tax breaks for ‘paper pushing’ money managers. Featuring the Trump Squirrel.

Peter Reilly, Sending IRS Against Phony Churches Is Bringing A Knife To A Gun Fight. “Fundamentally the IRS cannot base its enforcement actions on the content of an organization’s beliefs.”

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Stephen Olsen, Summary Opinions for July (Procedurally Taxing). Coverage of recent happenings in tax procedure.

Jason Dinesen, Does a Sole Proprietorship Need a Balance Sheet? Technically, no, but it’s foolish not to keep one.

Career Corner. Former Ryan Principal Made a Helluva Career Limiting Move (Caleb Newquist, Going Concern).

 

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