New Guidance Provides Relief for Opportunity Zone Investors – Adam Sweet, Eide Bailly. “In response to the COVID-19 pandemic, the government released guidance (Notice 2020-39) on June 4, 2020, providing certain relief for Opportunity Zone investors. This relief comes in the form of extended deadlines and the relaxation of rules for certain provisions of the Opportunity Zone program.”
One of several changes includes an extension of the 180-day investment window:
“Generally, investors with qualified capital gains have 180 days from the date of sale generating the capital gains to reinvest those gains into a qualified opportunity fund (QOF). There are also special rules for partnerships, S corporations, and trusts realizing eligible capital gains. Under Notice 2020-39, if the last day of the 180-day reinvestment period falls between April 1 and December 31, 2020, the last day of the reinvestment period will be deemed to fall on December 31, 2020.”
Brady Backs Accelerating Business Tax Breaks – Jad Chamseddine, Tax Notes ($). “House Ways and Means Committee ranking member Kevin Brady, R-Texas, told reporters June 12 that businesses in certain industries will need capital to survive. A proposal being discussed by Senate Republicans would allow companies to use business tax credits this year that wouldn’t otherwise be available until future years.”
“Any proposal to accelerate tax credits for big businesses may get a cool reception from Democrats. Brady said that while he hasn’t had extensive discussions with Democrats, he expects pushback considering the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 6800) would repeal a provision that allows businesses to carry back net operating losses before 2018. “Right now, we need to be pumping capital into Main Street businesses, especially to keep their workers alive economically,” he said.”
Proposed Regulations Issued Defining Real Property for Post-TCJA Like-Kind Exchanges – Ed Zollars, Current Federal Tax Developments. “The Tax Cuts and Jobs Act limited like-kind exchanges under §1031 to exchanges of real property effective January 1, 2018. The IRS has issued proposed regulations, [1] upon which taxpayers may rely,[2] to implement these revisions in §1031.”
IRS employees returning to offices in 9 more locations – Kay Bell, Don’t Mess With Taxes. “Thousands more Internal Revenue Service employees are will be back in their offices this month, starting Monday, June 15. They're the second wave of IRS staff to return to work after the agency in mid-March sent more than half of its 81,000 staff home as a way to help slow the spread of COVID-19.”
White House floats tax credit to encourage return to eating out, U.S. travel – Kay Bell, Don’t Mess With Taxes. “Donald J. Trump broached the idea of restoring the full deductibility of business meal expenses just days after he signed the Coronavirus Aid, Relief and Economic Security (CARES) Act into law in late March. That $2 trillion package provided some business and individual pandemic tax breaks, into law in late March. But Trump thinks that Capitol Hill also should have added to the tax break menu by making business meals more appealing, like they were back in the early 1980s.”
During a meeting with industry executives, Trump floated the idea of the “Explore America” Tax Credit. Bambridge Accountants, provided a press release describing what they think the credit could look like:
"While the Explore America Tax Credit is still being reviewed by Congress and President Trump's administration, the initial proposal is a tax credit of up to 50 percent of a household’s spending on expenses including airfares, car rentals, hotels, theme parks and restaurants. The tax credit would be up to $4,000 per household and it would apply for eligible expenses in 2020 and 2021.”
Maybe Every Good Turn Deserves A Tax Break – Marie Sapirie, Forbes. “The deduction for charitable contributions is a centenarian that’s been through a lot since its 1917 inception. The coronavirus crisis could set the stage for the next major revision of section 170, and the most popular option seems to be expanding the deduction.”
Defined Benefit Plan Can Lower Your 2020 Taxes – David Rae, Forbes. “The year 2020 will be challenging for many business owners, but if your business is still bringing in a nice income, you could benefit greatly from setting up the right retirement plan. For the top-performing business, this may be a combination of a 401(k) plan with a Defined Benefit Pension Plan, which could save you potentially hundreds of thousands of dollars in taxes.”
Beyond Digital: Is Cryptocurrency the Next Tax Frontier? – Mindy Herzfeld, Tax Notes ($). “As the cryptocurrency market continues to grow exponentially, it’s an understatement to say IRS guidance hasn’t kept up. A lack of guidance entails significant risks, including potential revenue loss, leaving taxpayers unsure how to properly comply with the law, and opening the door to illegal activities that can take place unnoticed.”
“The limited IRS guidance to date tries to answer questions by analogizing cryptocurrency to other asset classes and types of income. The IRS’s attempts to develop solutions have been hampered by adherence to the notion that cryptocurrency should be taxed uniformly, even though it serves many purposes: investment assets; securities; derivatives; a means of exchange; and in some cases, fiat currency. By next year, its uses may have expanded further.”
Learn more about what the IRS has said about cryptocurrency here.
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