Tax News & Views RMD Pasta Ring Roundup

IRS urges many retirees to make required withdrawals from retirement plans by year-end deadline - IRS:

The Internal Revenue Service today reminded those aged 73 and older of the deadline to take required minimum distributions from individual retirement arrangements (IRAs) and other retirement plans, and highlighted updates introduced by the SECURE 2.0 Act.

Required minimum distributions (RMDs) are amounts that many retirement plan and IRA account owners must withdraw annually. These withdrawals are considered taxable income and may incur penalties if not taken on time. The IRS.gov retirement plan and IRA required minimum distributions FAQs webpage provides detailed information regarding the new provisions in the law.

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Penalties for missed distributions

If an account owner fails to withdraw the full amount of the RMD by the due date, the owner is subject to a 25% excise tax on the amount not withdrawn. The 25% excise tax rate is reduced to 10% if the error is corrected within two years.

RMD calculations

IRA trustees or plan administrators must either report the RMD amount to the account owner or offer to calculate it. Each IRA plan’s RMD must be calculated separately, however owners can withdraw the total required amount from one or more accounts of their choice as long as the annual requirement is met. An IRA trustee or plan administrator may calculate the RMD, but the account owner is ultimately responsible for ensuring the correct RMD is taken. The IRS provides required minimum distribution worksheets to help calculate the RMD amounts and payout periods.

Treasury Finalizes Simplified Foreign Currency Rules - Natalie Olivo, Law360 Tax Authority ($):

In general, the guidance covers divisions of U.S. companies that have gains or losses in a foreign currency — entities known as qualified business units, or QBUs, which maintain separate books and records. The regulations give companies the opportunity to elect several simplifying approaches for these affiliates that would apply Section 987 in a way that more closely conforms to financial accounting rules, according to Treasury.

Treasury also proposed regulations Tuesday that are designed to "reduce the compliance burden" regarding certain foreign currency transactions that are disregarded for U.S. tax purposes.

Now You Can Avoid Taxes Like the Rich and Famous - Jon Sindreu, Wall Street Journal:

Traditionally, it only made sense to dabble in such products if you had savings in the many millions of dollars. But tax-optimizing solutions are booming as a wave of innovations reduce barriers to entry.

Take Vanguard, which in 2021 bought direct-indexing specialist Just Invest, and is deploying this capability for accounts with as little as $250,000. Two decades ago, replicating an index while assessing the tax situation daily in order to sell and reinvest—all while not violating the wash-sale rule that prevents tax-loss harvesting if a similar security is purchased shortly after—required an unworkable number of staff hours. Now it can be done by a computer algorithm.

Schwab’s direct-indexing strategies have an even lower minimum: $100,000.

The Coming 2025 Tax Battles

House GOP’s top tax writer battles with party leaders on Trump’s border-tax strategy - Benjamin Guggenheim and Jordain Carney, Politico:

House Ways and Means Chair Jason Smith, a close Trump ally who is playing a lead role in drafting potential tax cuts, is facing off against incoming Senate Majority Leader John Thune over what should take priority once Republicans take back power next year. Smith wants to take one big swing at passing conservative priorities including changes to tax, border and energy policy.

Thune, backed by incoming Budget Chair Lindsey Graham and incoming White House deputy chief of staff for policy Stephen Miller, among others, is trying to rally the party behind a two-step plan in which tax fights would be resolved at the end so they don’t hold up other items on the GOP’s wish list.

From Politico's Playbook newsletter this morning:

Feels like JASON SMITH might be the loneliest man on Capitol Hill. The House Ways and Means chair has been the most aggressive voice questioning the two-track reconciliation approach favored by Senate GOP leaders. As Benjamin Guggenheim and Jordain Carney report, top House Republicans agree with him that a single, jam-packed, tax-focused bill would be easiest. But consider what Speaker MIKE JOHNSON had to say on Fox News last night: “There probably will be at least two reconciliation packages. So the determination right now, is where does the tax piece fit in?”

Senate, House Republicans Split on Tax Bill Timeline for 2025 - Zach Cohen and Chris Cioffi, Bloomberg ($). "Consolidation of support behind Thune’s proposed schedule augurs a later agreement on renewal of expiring pieces of the GOP’s 2017 tax law, spelling uncertainty for taxpayers and preparers in the lead-up to the 2026 filing season."

Tax Bill Should Include Tips; SALT Solution Unclear, Scalise Says - Doug Sword, Tax Notes ($):

Noting that President-elect Trump carried the swing state of Nevada, where he ran on a proposal to not tax tips, Scalise said he expects congressional Republicans to back up that pledge.

“When Trump talked about no tax on tips, we’re going to put that in the bill. We’re going to figure out a way to get this done because we promised we’d do it,” Scalise said.

Regarding changes to the $10,000 cap on itemized deductions for state and local taxes:

...he described how SALT was a House GOP problem and not a Senate GOP problem by pointing out that Republicans elected no senators from the five states — California, New York, New Jersey, Illinois, and Minnesota — most affected by the $10,000 SALT deduction limitation.

All About That Base(line) - Daniel Bunn and Garrett Watson, Tax Policy Blog. "The bottom line is that using the current policy baseline inflates deficits even if it gives lawmakers the rhetorical opportunity to say that legislation extending the Tax Cuts and Jobs Act has no additional cost."

Incoming Tax Personnel

A Miss by Trump: Billy Long as IRS Commissioner - Russ Fox, Taxable Talk (my emphasis):

According to an article in Tax Notes, Senator Todd Young (R-IN) liked the nomination. Predictably, Senator Elizabeth Warren (D-MA) didn’t like it (but I doubt she would like anyone nominated by President Trump). Joe Kristan (who is the principal writer of Eide Bailly’s tax blog) told Tax Notes, “[W]hile it’s not surprising that Trump would want his own commissioner, it is a little surprising that he didn’t find somebody from the business world who would know something about managing a large enterprise, if only to control it better.”

My reason is different. Mr. Long’s tax background is a bit checkered: He worked for what we in the tax professional community call an “ERC Mill.” These were the companies who had continual radio and television advertising saying everyone qualified for the Employee Retention Credit (ERC), and you can get thousands and thousands of dollars from it. An aside: Our firm had five clients approach us about the ERC. Only two qualified: one qualified for one quarter; the other, who was told by an ERC mill that he qualified for $125,000 in credits, qualified for about 15% of that. The ERC mills left a very bad taste with tax professionals.

But Russ, Billy Long said on a podcast that "virtually everyone" qualifies!

Crapo Plans to Move Quickly on Bessent Nomination - Welsey Elmore, Tax Notes ($):

Incoming Senate Finance Committee Chair Mike Crapo, R-Idaho, said he plans to act swiftly to move President-elect Trump’s pick for Treasury secretary through the committee next year.

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Trump announced the selection of Bessent on November 22. Bessent is the CEO of investment firm Key Square Group and served as an economic adviser for Trump during his reelection campaign.

Outgoing tax personnel

Biden Says Trump’s Tax Cuts and Tariffs Would Be ‘a Major Mistake’ - Zolan Kanno-Youngs, New York Times:

But a month after the election, Mr. Biden appeared to be speaking less to the electorate and more to the historians. He promised that Americans would begin to feel the effect of his federal investments in infrastructure, clean energy and semiconductor manufacturing in the years to come.

In a last-ditch attempt to salvage his agenda, Mr. Biden also noted that most of the federal investments have benefited districts led by Mr. Trump’s party. That includes the Inflation Reduction Act, Mr. Biden’s clean energy bill that Mr. Trump has threatened to gut.

Blogs & Bits

An RMD to-do list, including ways to use the money - Kay Bell, Don't Mess With Taxes. "When all your retirement money is in various traditional IRAs, the required withdrawal amount for each must be calculated separately. However, you don’t have to take a separate RMD from each IRA. You may add up the total required amount due from all your IRAs and then take that sum from one IRA or a portion from each of your IRAs."

Simple Tips To Maximize The Tax Benefits Of Your Charitable Giving - Kelly Phillips Erb, Forbes. "Choose carefully. Remember, for federal income tax purposes, only donations to qualified charitable organizations are deductible. And even if you don’t plan on the deduction, it’s a good idea to check out the credentials of a potential charitable organization before you donate. If you're looking for a tax break, you can always confirm an organization's charitable status through the IRS website using its Search Tool."

Updated! Federal District Court Pauses Enforcement of Beneficial Ownership Information Reporting - Kristine Tidgren, Ag Docket:

FinCEN has posted this statement in response to the federal court's preliminary injunction:

In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.

Those who can't do, teach. Those who can't teach become administrators. Some of them steal.

Former assistant dean sentenced to 36 months in prison for million-dollar embezzlement from Essex County graduate school - IRS:

A former assistant dean of an Essex County graduate school was sentenced yesterday to 36 months in prison for defrauding her former employer of more than $1.3 million, U.S. Attorney Philip R. Sellinger announced.

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“The defendant abused her position of trust as an assistant dean to orchestrate an elaborate embezzlement scheme for more than a decade. In doing so, she and her co-conspirators stole more than $1.3 million intended to benefit the school and its students. My office is committed to relentlessly prosecuting those who commit financial frauds.”

While the IRS didn't disclose the name of the school, a moment's internet research reveals that Seton Hall Law School was the victim. While no tax charges were proffered, I don't assume that the former assistant dean paid taxes on the stolen funds.

What day is it?

It's "Noodle Ring Day." Yeah, I didn't know either. Bing Copilot explains:

A "Noodle Ring" is a vintage dish that combines cooked noodles with various ingredients, then bakes them in a ring-shaped mold, often a Bundt pan. The result is a savory, cake-like presentation that's both visually appealing and delicious.

Here are a couple of popular variations:

1. Classic Noodle Ring: This version typically includes egg noodles, eggs, milk, Worcestershire sauce, ketchup, grated cheese, and sometimes ham, peas, and pearl onions

2. Picture Perfect Noodle Ring: This recipe uses fine egg noodles, cream of mushroom soup, sour cream, melted butter, Worcestershire sauce, beaten eggs, shredded cheddar cheese, chopped broccoli, onion soup mix, and salt

The noodle ring is often served as a side dish and can be filled with various ingredients like vegetables, meats, or sauces to complement the main course. It's a nostalgic comfort food that brings a touch of retro charm to the table.

I'm not sure this holiday will catch on.

Tax News & Views RMD Pasta Ring Roundup

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Joe B. Kristan, CPA