May 3, 2022
How a Georgia Pine Farm Became a Significant Tax Deduction - Richard Rubin, Wall Street Journal ($):
In 2020, some McGinnis family members sold off three-fifths of the property for $310,000. By the end of 2021, the Oglethorpe County land had been sold again, this time to a business that raised $10.7 million from investors in a land-conservation deal. That transaction could yield its investors millions of dollars more in tax deductions—as well as scrutiny from the Internal Revenue Service.
The deal was typical of the “syndicated conservation easements” booming in this sliver of northeastern Georgia, which is known for granite deposits used in tombstones and statuary. For some appraisers and deal makers, the prospect of granite mining can drive up a property’s hypothetical value—and also drive up the tax deduction associated with promising not to conduct mining.
Related: IRS Offering Potential Settlement for Syndicated Conservation Easements.
Lawmakers consider carbon border tax, environmental reviews at bipartisan climate meeting - Rachel Frazin, The Hill:
On Monday, a group of about a dozen lawmakers from across the ideological spectrum met to discuss the issues in what Sen. Joe Manchin (D-W.Va.) described as “getting everyone together on some ideas … on how we can all work together.”
The talks come as Democrats’ push for climate action through a reconciliation bill remains uncertain. Democrats have called for policies including tax credits for clean energy and electric vehicles and an incentive program aimed at reducing methane emissions from oil and gas production.
Asking for a word on foreign tax credits - Bernie Becker, Politico:
A bipartisan group of 10 House tax writers is urging the Treasury Department to be more open to business concerns about final foreign tax credit regulations released late last year.
The 10 lawmakers told Treasury Secretary Janet Yellen that they appreciated that foreign tax credits, in which companies can get a tax break for income taxes paid to other countries, are a particularly dense subject. But they added that they were concerned that the final FTC rules could lead to American businesses being double-taxed and discourage “investment by U.S. companies in emerging markets where we need to stay competitive with China.”
The proposed rules would limit what foreign taxes qualify as "income" taxes creditable against U.S. tax liability.
IRS Issues Health Savings Account (HSA) limits for 2023 - Bailey Finney, Eide Bailly:
2021 2022 2023 HSA Contribution limit: Single plans $ 3,600 $ 3,650 $ 3,850 HSA Contribution limit: Family plans $ 7,200 $ 7,300 $ 7,750
The Aftermath of Arizona’s Proposition 208 and the Potential for a Flat Tax - Timothy Vermeer, Tax Policy Blog:
The saga of Proposition 208, Arizona’s income surtax, appears to have finally reached its conclusion. The only uncertainly that remains concerns the timing of Arizona’s transition to a flat-rate individual income tax.
Proposition 208 reached the Arizona Supreme Court on August 19, 2021, but it was ultimately declared unconstitutional to the extent it mandated expending tax revenue in excess of a constitutional cap on education spending. The Maricopa County Superior Court was left to determine whether appropriated education expenditures with Proposition 208 revenue would truly exceed the cap. On March 11, the lower court confirmed the measure did, in fact, violate the expenditure limit.
Int'l Tax Enforcement Group Warns About Token Fraud - David Hansen, Law360 Tax Authority:
The group, known as J5, consists of the Australian Taxation Office, the Canada Revenue Agency, the Dutch Fiscal Information and Investigation Service, HM Revenue & Customs from the U.K. and the IRS Criminal Investigation division.
Strong indicators of fraud include newly created NFTs valued at more than $100,000 that do not have a history of transactions, the J5 said. Another is a newly created NFT sold at high price points immediately and out of line with others in the collection, according to the group. The high price may be a sign that the transactors are hiding the true reasons they are purchasing the NFT, the J5 said.
What Happens to Employees When the Employer Fails to Pay Over to the Government Withheld Taxes - Keith Fogg, Procedurally Taxing. "So, these employees have even more problems than not having their wages withheld. They also appear not to have a statement sent to the IRS (or Social Security) reflecting the amount paid to them and the amount withheld. If an employer never files these forms, employees struggle to get credit. A procedure exists for creating a substitute W-2 but that usually relies on paystubs or a statement from the company. This is a major procedural problem by itself which can be compounded where an employer insists on making wage payments through a platform like Zelle or a similar middleman."
The Saver’s Credit: A Tax Credit to Promote Retirement Security - Catherine Collinson, Bloomberg. "The saver’s credit, referred to as the Retirement Savings Contributions Credit by the IRS, is a tax credit above and beyond the tax-favored treatment of retirement accounts. It may be applied to the first $2,000 of voluntary contributions that an eligible taxpayer makes to a 401(k), 403(b), or similar employer-sponsored retirement plan; a traditional or Roth IRA; or an ABLE account in the past year."
U.S. Digital Asset Strategy Needs a Stronger Tax Focus - Nana Ama Sarfo, Tax Notes Opinions:
The IRS’s position is that virtual currencies are treated as property for tax purposes, but that blanket position fails to address various nuances. For example, how should passive income earned through cryptocurrency staking be treated? If a taxpayer uses virtual currency to purchase new and emerging digital assets like non-fungible tokens, including digital art stored in a blockchain, how are those transactions taxed?
Related: New Tax Guidance Issued on Cryptocurrency Transactions.
2022 tax-related housing cost adjustments for expensive international locales - Kay Bell, Don't Mess With Taxes. "Since costs of living vary widely, the U.S. Department of State tracks the worldwide amounts and grants an allowance to employees officially stationed in a foreign location where the cost of living, exclusive of quarters costs, is substantially higher than in Washington, D.C."
Disabled Veteran Could Not Exclude Military Retirement Pay in Excess of Amounts Received from VA as Disability Payments - Ed Zollars, Current Federal Tax Developments. "The Tax Court agreed with the IRS that a disabled Army veteran could only exclude from income the designated disability payments she received from the Veterans’ Administration, while the payments she received separately as part of her military retirement payments were taxable..."
Johnny Depp & Amber Heard Have Tax Issues Too - Robert Wood, Forbes. "Heard may have thought she would come out OK tax-wise if she received the $7 million from Depp and then handed the full $7 million to charity. What’s wrong with that, you might ask? If she had to include $7 million in income, couldn’t she deduct the $7 million she immediately gave to charity? Not hardly. There are annual limitations on charitable contributions—usually 50% of adjusted gross income. "
Money raised through crowdfunding may be taxable - Wolters Kluwer Tax & Accounting. "The income tax consequences of money raised through a crowdfunding effort depend on all the facts and circumstances. Crowdfunding proceeds are generally included in gross income, unless federal income tax law expressly excludes them."
Successor Liability for Unpaid Taxes - Jason Freeman, Freeman Law. "Generally, the purchaser of assets does not assume the liabilities of the seller. Successor liability, however, is an exception to the general rule. Under the successor-liability doctrine, the IRS may seek to recover unpaid taxes from a 'successor'—often a purchaser of corporate assets."
Policies Critical to Economic Recovery Set to Expire Soon - Daniel Bunn, Tax Policy Blog. "In the United States, bonus depreciation, which was adopted in 2017, will begin phasing out in 2023. By 2027, the treatment of business investment will return to a much less generous policy."
How to Undertake Reform of the Charitable Deduction - C. Eugene Steuerle, TaxVox. "Many proposals also ignore the inability of the IRS to enforce the current deduction, with its very limited audit rates and no computerized document matching to verify claims without an expensive audit."
Breaking news from 2008. Top Paterson aide Charles O'Byrne did not pay taxes due to 'non-filer syndrome', his lawyers say - Kenneth Lovett and Glenn Blain, New York Daily News, 10/22/2008. "Lawyers for top Paterson administration aide Charles O'Byrne claimed Wednesday he failed to pay taxes for five years because he has 'non-filer syndrome.'"
This is not an IRS-approved disability.
Everyone, just chill. It's National Garden Meditation Day! "It is the practice of taking time out from one’s hectic routine and going to a garden, picking a nice spot, and then meditating to relax your mind and body."
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.