Tax Update Blog

Tax News & Views Yachts and Waterfalls Roundup

October 6, 2020 | Blog
By Joe Kristan

John McAfee Indicted for Tax Evasion - Department of Justice Press Release:

According to the indictment, John McAfee earned millions in income from promoting cryptocurrencies, consulting work, speaking engagements, and selling the rights to his life story for a documentary. From 2014 to 2018, McAfee allegedly failed to file tax returns, despite receiving considerable income from these sources. The indictment does not allege that during these years McAfee received any income or had any connection with the anti-virus company bearing his name.

According to the indictment, McAfee allegedly evaded his tax liability by directing his income to be paid into bank accounts and cryptocurrency exchange accounts in the names of nominees. The indictment further alleges McAfee attempted to evade the IRS by concealing assets, including real property, a vehicle, and a yacht, in the names of others.

An article in Tax Notes ($) says the indictment was unsealed after Mr. McAfee was arrested in Spain.

Not many people get into tax trouble by hiding the ownership of a yacht, but there are lots of cryptocurrency investors. This may be the most prominent taxpayer caught up in the IRS drive to bring Bitcoin and other digital currencies into the tax system. Taxpayers who think cryptocurrency somehow is the way to beat the IRS should reconsider.

Related: New Tax Guidance Issued on Cryptocurrency Transactions

Other Coverage: 

Software Pioneer John McAfee Indicted On Tax Charges - Kelly Phillips Erb, Forbes:

McAfee was also vocal about not paying taxes, declaring on Twitter in 2019, “I have not paid taxes for eight years... I have not filed returns. Every year I tell the IRS ‘I am not filing a return, I have no intention of doing so, come and find me.’”

They seem to have done so.

7 IRS Tax Lessons From John McAfee’s Tax Evasion Indictment - Robert W. Wood, Forbes. "Report your income, and always file."

John McAfee indicted for tax evasion, arrested in Spain - Rishi Iyengar and Christina Carrega, CNN Business.

Anti-virus creator John McAfee arrested over tax evasion charges - BBC News.

 

Ten Ways to Stay Safe Online - Joe Sousa, Eide Bailly:

Unsure? Don’t click it. It’s important to note that technology alone will never be able to fully protect you. Attackers have learned to bypass even the most advanced security technology by attacking you. If they want your password, credit card or personal data, the easiest thing for them to do is to trick you into giving them this information.

No matter where the uncertainty arises, whether you’re in an email or on a website, consider the source and its contents. Why was this email sent to me? Where will this link take me?

 

Nov. 21 is new deadline to apply for COVID relief money - Kay Bell, Don't Mess With Taxes.

IRS Extends Relief Payments, Challenges Prisoners’ Claims - William Hoffman, Tax Notes. "The IRS extended to November 21 its deadline for people to use its online nonfiler portal to qualify for economic impact payments (EIPs), even as the agency challenged prisoners’ right to claim them."

SIFL Rates Published for Second Half of 2020 - Ed Zollars, Current Federal Tax Developments. These are figures used to determine the value of personal use of business aircraft.

Lesson From The Tax Court: Why Vacation Home Losses Are Difficult To Deduct - Bryan Camp, TaxProf Blog. "The taxpayers owned a beach house in Sea Ranch, California and rented it out.  They had net losses.  The Court did not allow them to deduct those losses to shelter non-rental income, even though their personal use was only about one week each year.  It’s a nice lesson on how the restrictions on deductions in §280A and §469 work."

 

The Stock Market’s Leaders Appear Most Vulnerable to Biden’s Tax Plan - Karen Langley, Wall Street Journal ($). "Democratic presidential nominee Joe Biden has proposed raising the corporate tax rate to 28% from 21%, imposing a new minimum tax on U.S. companies and increasing taxes on foreign income of many U.S.-based multinationals, among other plans."

Why Tax Losses Matter (for Pres. Trump’s Taxes and Everyone Else’s) - Leandra Lederman, The Surly Subgroup. "Moreover, because the annual periods the federal income tax system generally uses are somewhat artificial, particularly compared to an ongoing business, the federal income tax law, in IRC § 172, allows 'net operating losses' to be carried to other tax years. Thus, for example, losses that the tax code permits to be carried back to previous tax years can produce a tax refund for those past years."

 

An Update on the Post Reporting on the sending of Notices with Bad Dates - Keith Fogg, Procedurally Taxing. "In this post I will explain what happened in the sending of the notices with bad dates in greater detail based on the information now available to me."

Maine Extends Corporate Tax Filing Due Date to November 16 - Tax Analysts. "In response to COVID-19 related corporate tax changes at the federal level, Maine Revenue Services (MRS) has automatically extended the filing deadline for corporate taxpayers in Maine, on extension, from October 15, 2020 to November 16, 2020.

The AICPA maintains a list of state tax filing deadlines affected by the COVID epidemic.

Colorado Proposition 116: Will Voters Reduce the State Income Tax Rate? - Katherine Loughead, Tax Policy Blog. "his Election Day, Colorado voters will weigh in on Proposition 116, the Decrease Income Tax Rate from 4.63% to 4.55% Initiative. It would permanently reduce the state’s flat income tax rate from 4.63 to 4.55 percent and be retroactive to January 1, 2020, meaning taxpayers would benefit from the relief starting this year."

 

Today in history: St. Anthony Falls, the only waterfall on the Mississippi River, nearly was lost when the Hennepin Island tunnel collapsed on October 5, 1869. St. Anthony's Rapids just wouldn't be the same thing. Related: “Minneapolis is Ruined”: The Tunnel Disaster of 1869.


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This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.