October 27, 2020
IRS Releases 2021 Tax Rates, Standard Deduction Amounts And More - Kelly Phillips Erb, Forbes. "These are the numbers for the tax year 2021 beginning January 1, 2021. They are not the numbers and tables that you’ll use to prepare your 2020 tax returns in 2021 (you’ll find them here). These are the numbers that you’ll use to prepare your 2022 tax returns in 2022."
Trump Won't Unveil Middle-Class Tax Cut Plan Before Election - Alexis Gravely, Tax Notes ($). "The release said Trump would share additional details about his plans in his speeches while campaigning, but with only days until the election, it’s still unclear what those policies would look like in practice."
Placing Joe Biden’s Tax Increases in Historical Context - Erica York and Garrett Watson, Tax Policy Blog. "This context shows that while Biden’s proposal would not result in the largest tax increase on record, it would be large by historical standards and would have a negative effect on long-run output."
New IRS Enforcement Priorities Include Partnership Reporting - William Hoffman, Tax Notes ($):
In particular, the IRS is focused on the reporting of partnership capital accounts on draft Schedule K-1 of Form 1065, “U.S. Return of Partnership Income,” and on international aspects of partnership reporting, Desmond said. “That, I think, reflects a long-standing priority of the IRS to focus on partnership compliance” in response to congressional directives in the Bipartisan Budget Act of 2015, he said.
Draft 1040 Instructions Say No Reports for Merely Holding Crypto - Nathan J. Richman, Tax Notes ($):
Aside from some revisions related to the prominence of the question, the main change in the instructions is the addition of this statement: “A transaction involving virtual currency does not include the holding of virtual currency in a wallet or account, or the transfer of virtual currency from one wallet or account you own or control to another that you own or control.”
IRS to Resume Issuing Balance-Due Notices - William Hoffman, Tax Notes. "In response to the coronavirus pandemic, the IRS suspended mailing CP501 notices about taxpayer tax account nonpayment, CP503 notices requesting that a taxpayer contact the agency about an unpaid bill, and CP504 notices warning that a taxpayer’s state income tax refund may be taken to pay a federal tax debt."
Lesson From The Tax Court: Losing Gambler Gets Twice Lucky In Tax Court - Bryan Camp, TaxProf Blog. "Judge Lauber bucked both sets of precedents to allow the taxpayer a gambling loss deduction equal to over $350,000 of gambling wins reported on various W-2Gs. There are good reasons for why Judge Lauber did this, but the bottom line is that this taxpayer got twice lucky."
Treasury’s Big Business Purpose Problem - Benjamin M. Willis, Tax Notes. "Treasury will lose many principal purpose battles because many of the regulatory tests lack a basis in law and don’t satisfy procedural requirements."
34th Anniversary of TRA86 Enactment - What's Changed and Still Needed? Annette Nellen, 21st Century Taxation. "Why was there a TRA86? President Reagan wanted to lower the rates and there was bi-partisan support for a fairer, simpler tax law that would be more supportive of economic growth. There was also a desire to shut down some problem areas such as tax shelters that middle and high income individuals were investing in and get most corporations to use the accrual method of accounting and the percentage of completion method for their long-term contracts (as they would for their GAAP financial statements)."
IRS Releases 2020 Forms 1094/1095 and Related Instructions, Including New Rules for ICHRA Reporting - Thomson Reuters Tax & Accounting. "Both sets of instructions indicate indexed penalty increases for reporting failures from $270 to $280 per return, with calendar-year maximum penalties increasing from $3,339,000 to $3,392,000."
Federal Court Rules for Tribe in South Dakota Tax Dispute - Jennifer McLoughlin, Tax Notes ($):
In Flandreau Santee Sioux Tribe v. Terwilliger, the U.S. District Court for the District of South Dakota ruled in favor of the Flandreau Santee Sioux Tribe in a dispute that had been remanded by the Eighth Circuit. In the 121-page opinion, Judge Karen E. Schreier found that federal law preempts the South Dakota contractor’s excise tax on the non-tribal contractor’s gross receipts derived from the casino-related construction and renovation.
Taxes also to be decided by several Nov. 3 ballot initiatives - Kay Bell, Don't Mess With Taxes. "Ballotpedia, the Wisconsin-based nonprofit that's been tracking election data since 2007, says this year voters in 12 states will decide 19 tax-related ballot measures."
Four Decades After Proposition 13’s Tax Revolt, Will California (Split) Roll It Back with Proposition 15? Richard Auxier, Tracy Gordon and Kim Reuben, TaxVox. "If approved, Proposition 15 would undo some of those limits and significantly increase taxes on many commercial and industrial properties in the state. Proposition 15 might not shift the trajectory of tax policy for a generation, but it could significantly reshape California’s finances."
Louisiana Legislature Passes Tax Relief Before Adjourning Sine Die - Lauren Loricchio, Tax Notes. "H.B. 37 would provide an income tax credit for annual and renewal license or permit fees paid by owners of bars and restaurants to the alcohol and tobacco control agency for 2020. To be eligible, a business's 2020 sales must be lower than in 2019, as a result of its operations being interrupted by the COVID-19 pandemic. Unused credits could be carried forward for three years."
The State Business Tax Climate Index Is Your Guide to Economic “Wins Above Replacement” - Jared Walczak, Tax Policy Blog:
Tax competition is a little like WAR—not conflict, but Wins Above Replacement. The term comes from baseball, where it is intended as a sabermetric statistic to measure how many more wins a team can claim due to a specific player above the amount that would be generated by a replacement-level player. It’s much the same way in public finance: a well-structured tax code won’t make the Wyoming Basin a metropolis, nor will poor tax structure make Manhattan a ghost town. But tax structure does play a role in a state’s economic successes or failures, and often a substantial one. Every state can benefit from a simple, neutral, transparent, pro-growth tax structure.
Senate Investigation Of Easement Syndications Worth Celebrating - Peter Reilly, Forbes. "Fundamentally the advocates of the high multiple syndications have a different view as to what the law is. They believe that it is possible for an easement on property to be worth more, substantially more, than the property itself. It is a compelling belief, because the deals don’t work if it is not true."
Eleventh Circuit Tentatively Blesses Floating Development Rights and More Fully Blesses Mutual Amendment Provisions In Conservation Easements - Chaim Gordon. "It is clear that the Eleventh Circuit holds that such amendment provisions generally do not violate the 170(h)(5)(A) protected-in-perpetuity requirement. Moreover, the Tax Court is in full agreement with the Eleventh Circuit on this point. Thus, taxpayers can reasonably expect that such provisions will be upheld in future cases."
IRS Attorneys Issue Guidance for Imposing Civil Fraud Penalties on Syndicated Conservation Easement Transactions - Matthew Roberts, Freeman Law. "In these cases, the IRS memorandum advises IRS employees that if fraud is established at the partnership level (e.g., through actions of partnership managers), then all partners may be liable for the fraud penalty on any underpayments of tax resulting from adjustments to partnership items that are attributable to fraud."
Tax On Goldman Sachs $3 Billion Settlement, Taxes On $174 Million Pay Clawback? - Robert W. Wood, Forbes. "The news that Goldman Sachs is paying nearly $3 billion in the 1MDB mess was accompanied by news that the firm will claw back millions from top executives...most people in this unenviable position end up claiming an odd kind of tax refund under Section 1341 of the tax code. It embodies the "claim of right" doctrine, and attempts to place the taxpayer back in the position he would have been in had he never received the income."
Corporate Taxpayer (AIG) "Settles" Tax Shelter Litigation Admitting Tax Shelters Were Shams - Jack Townsend, Federal Tax Crimes. "But, just think about how much energy (creative and otherwise), time and resources were spent unnecessarily in creating the sham tax shelter to start with and then marshaling it through the administrative audit process (audit and appeals) and litigation before the taxpayer admitted the whole deal was a sham. Isn’t there some better way to deploy our resources?"
Roadkill – It’s What’s For Dinner (Reprise) - Roger McEowen, Agricultural Law and Taxation Blog. "If a wild animal is hit by a vehicle, the meat from the animal is the same as that from animal meat obtained by hunting – assuming that the animal is not diseased. So, in that instance, harvesting roadkill is a way to get free food – either for personal consumption or to donate to charity."
This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.