Holiday Break: Eide Bailly takes a holiday Thursday and Friday this week. We will be back Monday. Enjoy your Thanksgiving and stay safe.
Treasury Pick Yellen Likes Carbon Taxes and More Pandemic Relief, But Not The TCJA - Howard Gleckman, TaxVox:
Yellen has been concerned about income inequality for years and has explored several solutions. Notably, using the tax code to redistribute income, an idea favored by some Democrats on the left, is not among her priorities. Her focus has been on increasing wealth and income opportunities for low-income people rather than reducing the wealth of those at the top of the income distribution."
She calls for additional pandemic relief, including aid for state and local governments. The post is a good tax policy introduction to a key player in tax policy in the incoming Biden administration.
Potential Regulatory Changes in Tax Policy Under the Biden Administration - Garrett Watson, Tax Policy Blog:
With a likely divided U.S. Congress this January, the incoming Biden administration may have a limited ability to pass the tax changes proposed by Biden during the 2020 presidential campaign. Much of Biden’s tax plan included tax increases on higher earners and businesses, which are unlikely to be considered by a likely Republican-controlled Senate pending runoff election results in Georgia.
Instead, President-elect Biden may make greater use of regulatory changes to modify how tax law is interpreted and administered. There are several areas where a Biden Treasury Department, likely led by former Federal Reserve Chair Janet Yellen, may focus.
Likely areas for regulatory action listed are GILTI, carried interests, and estate taxes.
2020 Payroll Tax Relief Options Yield Disparate Outcomes - Jonathan Curry, Tax Notes ($). "Deferral of the employer’s share of payroll taxes was widely adopted and offered meaningful relief that has helped the business community weather the pandemic. Meanwhile, President Trump’s executive order authorizing a limited deferral of the employee share of payroll taxes received little uptake and introduced complexity for those who opted in."
Also: "A National Federation of Independent Business survey of 553 small business owners conducted at the end of September found that just 4 percent of those surveyed were deferring or planned to defer their employees’ payroll taxes."
Final Regulation Issued Defining Real Property for TCJA Revision to §1031 - Ed Zollars, Current Federal Tax Developments. "The preamble to the final regulations contains the following overview of the key changes found in the final regulations as compared to the proposed regulations issued five months earlier. First, it notes that the final regulations modify the definition of real property to now refer to the appropriate state and local law definition of real property..."
IRS Guidance on Deducting Expenses paid with PPP Loan Proceeds - Ron Mountsier, Iowa Tax Cafe Blog. "Revenue Ruling 2020-27 makes it clear that taxpayers who received a PPP loan in 2020 cannot deduct expenses paid with the proceeds of that loan if at the end of 2020 the taxpayer reasonably expects to receive forgiveness of the loan, even if the taxpayer has not applied for forgiveness by December 31, 2020."
IRS Continues to Disallow Deductions for PPP Loan Forgiveness Related Expenses, Senators Fume - Chaim Gordon. "Rev. Rul. 2020-27, as well as Notice 2020-32 that preceded it, have not gone over well on the Hill."
Wait - Russ Fox, Taxable Talk. "Indeed, given the rules and procedures the IRS came up with in Revenue Ruling 2020-27 and Revenue Procedure 2020-51 it’s a good idea to know what the exact forgiveness is before filing your 2020 return…and that could be five months after applying for forgiveness. As always, it’s better to extend than amend."
Use Form 8915-E to report, repay COVID-related retirement account distributions - Kay Bell, Don't Mess With Taxes:
When you take money out of a traditional retirement vehicle — typically a tax-deferred IRA or 401(k) or 403(b) workplace plan — before you reach age 59½, you usually face a 10 percent penalty. That fine is waived for 2020 withdrawals.
You still, however, will owe tax on any of the money you withdraw. But that tax amount can be paid over three years, beginning with the payout year. If you prefer, you still have the option to pay the tax in full with your tax return filing for the year you got the distribution.
If within three years you recontribute the money you withdrew to make ends meet during the pandemic, your distribution will be treated as a rollover. That means you won't owe tax on the repaid retirement funds.
New Partnership Tax Capital Reporting May Prove Problematic - Chris Catarino and Joseph Criscuolo, Tax Warrior Chronicle. "From gathering prior-year tax returns and K-1's to determining the tax basis of all of the partnership's assets, complying with the new requirements can be onerous at best, and can shed light on prior-year reporting and allocation errors that present significant audit risk to the partners and the partnership, at worst."
Padda v Comm’r: Possible Opening in Defending Against Late Filing Penalty When Preparer Fails to E-file Timely - Leslie Book, Procedurally Taxing. "...it suggested that a relationship with a preparer who had history with the taxpayer of submitting e-filed returns on time might have led to a different outcome"
More Coca-Cola - On Transfer Pricing and Blocked Income Regulation - Jack Townsend, Federal Tax Procedure. "The Blocked Income Issue is whether the foreign law prohibition upon paying royalties prohibits the IRS from allocating the income to the U.S. party."
Here’s how visually impaired taxpayers can access IRS resources and information - IRS. "Tax-related content is available in a variety of formats for use with assistive technology such as screen reading software, refreshable Braille displays and voice recognition software."
Remote Work Force and State Tax Implications - George Rendziperis, Freeman Law. "Generally, states will assert that an employee working from home or remote location within the state will trigger nexus for the company."
Related: Telecommuting Workers in Refuge States Complicate State Taxes.
Minnesota Governor Announces COVID-19 Economic Relief Package - Carolina Vargas, Tax Notes. "The package would also provide a tax credit for businesses that donate food that would otherwise go bad or get tossed out, and would extend unemployment benefits for 13 more weeks."
Small Business Saturday - New Mexico Taxation and Revenue Department. "This year’s Small Business Saturday New Mexico Gross Receipts Tax Holiday will be Saturday, November 28, 2020. For this one day, the state suspends collection of gross receipts tax on sales of qualifying items at certain small business."
Top 500 past due balances - California Franchise Tax Board. "FTB is required by law to publish a list of the 500 largest tax delinquencies in excess of $100,000 twice a year and update the list when names are removed."
Will High‐Tax “Superstar Cities” Finally Need to Consider — Gasp! — Their Residents? - Scott Lincicome, Cato at Liberty. "The charts paint a pretty clear picture: as a state increases taxes on high earner residents, it tends to lose them to other, lower‐tax states."
So long, come back for the shows. On this date in 1783, the Last British soldiers leave New York after the signing of the Treaty of Paris ended the Revolutionary War.
So much to celebrate. Since many of us are not spending today driving as usual, we have more time to celebrate at home. Today we hit the jackpot, according to Nationaldaycalendar.com:
National Tie One on Day. Meaning aprons. What do you think it refers to?
Blase' Day "This unique observance gives us permission to be blase’ toward just about anything."
And my favorite: National Play Day With Dad. "On November 25th, National Play Day With Dad encourages fathers to spend the day focused on fun with their kids. It’s a day designed for bonding and memories." Whether I can convince the boys to play, now that they are in their 20s, remains to be seen.
This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.