May 25, 2021
Nebraska Legislature Approves Corporate Income Tax Cut - Carolina Vargas, Tax Notes ($):
L.B. 432 would reduce the corporate income tax rate on income over $100,000 from 7.81 percent to 7.50 percent for tax years starting on or after January 1, 2022, and further reduce the rate to 7.25 percent for taxable income over $100,000 for tax years beginning on or after January 1, 2023. The first $100,000 of income would continue to be taxed at 5.58 percent.
The bill was sent to Gov. Pete Ricketts (R) May 21 after it was approved by the Unicameral Legislature on a 42–1 vote. It would become effective January 1, 2022, if enacted.
Top rates in states bordering Nebraska range from 0% in South Dakota and Wyoming to 9.8% in Iowa.
Iowa increases teacher deduction, Tuition and STO credits for 2021. The Iowa deduction for educator expenses and the K-12 tuition and textbook credit maximums are both doubled under new Iowa legislation. Governor Kim Reynolds last week signed HF 847, which also increases the Iowa School Tuition Organization Credit to 75% of the amount contributed.
The tax provisions are part of a larger educational policy bill. Other issues addressed in the bill include charter schools, open enrollment, school funding, and the pledge of allegiance in K-12 classrooms.
Florida Governor Signs Bill Banning Tax Incentives for Antitrust Violators - Lauren Loricchio, Tax Notes ($). "The governor of Florida has approved legislation that will prevent companies that violate antitrust laws from receiving tax incentives, part of a broader effort to curb the power of Big Tech companies."
Biden Administration Changes to GILTI and FDII Will Yield Automatic State Tax Increases - Katherine Loughead, Tax Policy Blog. "State taxation of GILTI increases tax burdens on U.S. multinationals for reasons having nothing to do with their activities in the state. States were never intended to tax international income, and doing so raises serious constitutional issues in many states."
GILTI Considerations Critical in Structuring M&A Deals - Emily Foster, Tax Notes ($):
Along with increasing the corporate tax rate, President Biden and Senate Democrats have proposed revamping the GILTI regime by removing the exemption for returns of qualified business asset investment, moving closer to a country-by-country application, and increasing the tax rate.
Practitioners and multinational tax executives fretting over potential changes to the GILTI regime are likely anxiously awaiting Treasury’s green book, which is expected within days and could offer more details and other proposals that could complicate M&A deals.
Conservatives have a new target: Biden’s IRS plan - Anita Kumar, Politico. "Conservative groups have launched a campaign of TV ads, social media messages and emails to supporters criticizing the proposal to hire nearly 87,000 new IRS workers over the next decade to collect money from tax cheats."
How a Global Minimum Tax Could Impact Markets - Mike Bird, Wall Street Journal ($). "A number of major American companies make more than 50% of their income internationally, and have both foreign effective tax rates and consensus 2022 effective tax rates below 15%, according to an analysis by Goldman Sachs. That list includes NVIDIA Corp., Broadcom Inc., Las Vegas Sands Corp. and Microchip Technology Inc."
Practitioners Call for an Appointed Tax Division Head ASAP - Nathan Richman, Tax Notes ($). "Seven years without a Senate-approved and presidentially appointed leader for the Justice Department Tax Division is too long, according to a letter from tax practitioners."
Colonial Pipeline Paid $4.4 Million In Bitcoin Ransom. Is It Tax Deductible? - Robert Wood, Forbes ($). "For businesses, paying ransom or blackmail is likely to fall into the wide category of business expenses. For example, most legal settlements and legal fees in business are tax deductible, even ones that are unusual."
5 tax tasks to take care after you've filed your return - Kay Bell, Don't Mess With Taxes. "4. File away your 2020 tax material: You did a great job of gathering all the documents you needed to file your tax return. Now it's time to store them."
Valuing Ag Real Estate With Environmental Concerns - Roger McEowen, Agricultural Law and Taxation Blog. "Such things as the presence of hazardous materials and wetlands can have a significant impact on land value. But, what is the degree of the impact on value, and how is it measured?"
Taxpayer Deference Can Help Close the Tax Gap - Benjamin Willis, Tax Notes. "OK, now let’s return to reality: The IRS loses many cases because its interpretations aren’t given deference (and because it often takes heavy-handed positions against well-meaning taxpayers)."
Notches in the Tax System: The Good, the Bad, and the Ugly - Jason Saving and Alan Viard, Tax Notes. "We have examined notches in which a small change in the taxpayer’s circumstances produces large changes in tax treatment. Notches cut against the general norm that change should be gradual and may at first glance seem like an entirely unwelcome aspect of tax policy. Many of the notches are indeed undesirable. Yet there are situations in which notches make sense, such as sparing small enterprises and transactions from substantial administrative or compliance costs."
Low Income Housing Tax Credit Enriching Private Interests At Expense Of Common Good - Peter Reilly, Forbes ($). "It seems that the Low Income Housing Tax Credit will continue as the major federal support for affordable housing. Democrats generally like affordable housing, sort of. And Republicans seem to like tax credits for corporations unreservedly. It has a certain Rube Goldberg complexity to it."
This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.