Tax News & Views Ohtani Oatmeal Raisin Roundup

Joe Kristan
April 30, 2024
Oatmeal Raisin Cookies

Key Takeaways

  • When does Ohtani lose hope for theft recovery?
  • KS Senate upholds tax cut veto
  • Maine Governor vetoes tax increase on high incomes.
  • Politics and tax.
  • Boyfriend's dad free return program fails to satisfy.
  • Massachusetts trooper ran security firm on state time, didn't pay taxes.
  • Oatmeal Cookie Day, Raisin Day. Do the math.

Tax May Still Come to Bat in Saga of Ohtani’s Translator - Nathan Richman, Tax Notes ($):

However, there are at least two other issues to address before Ohtani could deduct any of the allegedly stolen money.

First, section 165 theft loss deductions require proof of some sort of theft. Mizuhara’s text message acknowledging the theft might make that fairly straightforward, especially if he pleads guilty or is convicted.

More notably, taxpayers cannot take section 165 theft loss deductions until they have exhausted reasonable prospects of recovery. The possibility of criminal restitution along with any separate suit against Mizuhara could delay any claim Ohtani might have for a theft loss deduction for years.



Kansas and Maine Tax Vetoes

Kansas Senate fails to override governor’s veto of tax cut package - Sherman Smith and Rachel Mipro, Kansas Reflector:

Three Senate Republicans joined with Democrats on Monday to sustain Gov. Laura Kelly’s veto of a massive tax cut package over concerns about reshaping income tax brackets and the state’s long-term fiscal vitality.

The 26-14 override attempt on House Bill 2036 failed by one vote because two-thirds of the chamber’s 40 members are needed to override a veto.

Kansas House Votes to Override Gov. Kelly’s Latest Tax Cut Veto - Michael Bologna, Bloomberg ($). " HB 2036 would restructure the personal income levy, creating a new two-bracket system with rates of 5.15% and 5.55%—reducing the brackets from the current three and lowering the rates."

Maine Governor Vetoes Income Tax Increase for High Earners - Matthew Pertz, Tax Notes ($). "The bill would have created three additional tax brackets on top of the current tax structure, while amending the income thresholds for the existing brackets, beginning January 1, 2025." 

The top rate would have risen to 8.45%, up from the current 7.15%.


Politics of Tax

Taxes, Tariffs and Debt: Investors Start to Fear the Presidential Election - Gunjan Banerji, Wall Street Journal:

Fueling the nerves are the dramatically different decisions Biden or Trump could make on everything from immigration to who leads the Federal Reserve—and even how the central bank is run. The next president would also steer the U.S. through a time of heightened global tensions, with escalating conflicts in the Middle East and the continuing war between Russia and Ukraine.

One point of focus for investors: the Trump administration’s tax cuts, which will lapse after 2025

Biden vs. GOP: Tax fight heats up ahead of election - Tobias Burns, The Hill. "Starting in 2026, the individual tax rate reductions in the TCJA will also expire, along with the cap on state and local tax deductions, the boost in the child tax credit, the increase in the standard deduction, the limit on personal exemptions and the repeal of an alternative minimum tax on corporations."


IRS News: Biodiesel botch, crypto, direct file.

IRS Botching Noncompliant Biofuel Credit Claims, TIGTA Says - Jared Serre, Law360 Tax Authority ($):


The Internal Revenue Service must take additional steps to address noncompliant claims for biodiesel-related tax credits that resulted in the agency wrongly issuing more than $30 million in credits, the Treasury Inspector General for Tax Administration said in a report released Monday.

One-third of sampled taxpayers did not provide an approved registration number or Certificate of Biodiesel before claiming certain biofuel tax credits, wrongfully receiving a cumulative $30.3 million in credits, according to the report, dated April 24.

Crypto Tax Reporting Draft Form Signals Compliance Challenges - Vivian Wang, Bloomberg. "The IRS’s new 1099-DA form will strengthen the agency’s ability to collect taxes from crypto transactions and reduce tax evasion. With this form in place, digital asset brokers will be compelled to implement know-your-customer measures to collect and report taxpayer information to the IRS. This regulatory move helps foster a culture of self-enforcement among brokers, improving compliance across the industry."


Move Over, TurboTax? IRS Considers Expanding Free Tax-Filing Program - Richard Rubin, Wall Street Journal:

Agency officials haven’t decided yet whether and how to expand Direct File for next year’s tax-filing season. They will release a detailed report before a potential announcement later this spring. 

This year, Direct File was limited to 12 states and to taxpayers with relatively simple returns. A future expansion could add more states and more complex returns, such as those with itemized deductions, tax credits for health insurance or income from gig work. 



Blogs and bits

Monopoly game inspiration created to tout Georgism land tax - Kay Bell, Don't Mess With Taxes:

Lizzie Magie patented The Landlord’s Game in 1904, and it was published in 1906 through the Economic Game Company, of which she was an owner.

Magie's tax inspiration: According to Magie’s recently published obituary in The New York Times’ "Overlooked" memorial feature, her game would be familiar to anyone who has played Monopoly. People moved their tokens around the perimeter of a square board, buying real estate along the way, which they used to charge rent to other players.


She created the game as a way to teach people about the tax principles of the political economist Henry George.

Henry George advocated a Land Value Tax. It has never really caught on, though it still comes up, most recently in Detroit.


Court Denies Arizona's Motion to Enjoin IRS From Taxing State Rebate Payments - Parker Tax Pro Library. "A district court denied the state of Arizona's motion for a preliminary injunction to enjoin the IRS from imposing and collecting federal income tax on onetime payments made by the state of Arizona beginning in October 2023 to certain Arizona taxpayers. The court found that it likely did not have jurisdiction to issue the injunction under the Anti-Injunction Act and found that the alleged damage to the state resulting from its obligation to issue 1099s was not the appropriate subject of injunctive relief."

Basic Principles for Meals Deduction - Tax School Blog. "Because the deductibility of meals during entertainment relies on the explicit statement or separation of the cost of food and beverages from the other entertainment costs, practitioners should relay the importance of maintaining records and documentation to their clients to support such deductions. Taxpayers with copies of invoices or itemized receipts can better defend their positions if challenged by the IRS regarding these expenditures."

You can now get a $7,500 upfront discount for buying an EV - Nicolás Rivero, Washington Post. "As of Jan. 1, Americans who buy certain electric cars can request the federal electric vehicle tax credit as an upfront discount. The government created the tax credit in 2022, but before this year, car buyers had to wait until tax season to get their money. Now they can just pay up to $7,500 less for certain new EVs, or $4,000 less for used EVs, at dealerships that have signed up to offer the discount."


Tax Return Disclosures Avoid IRS Penalties, Ease Or Prevent Audits - Robert Wood, Forbes. " Many people do not want to disclose unless they must. They may not know what disclosure means, but it sounds like extra work. Disclosure sounds like it exposes you to extra audit risk, and no one wants a tax audit, since extra audit attention is the last thing anyone wants. Ironically, though, disclosure can actually reduce risk in some cases. So what is disclosure anyway?"

An Overview of the Failure to File Penalty - Thomas Gorczynski, Tom Talks Taxes. "In U.S. v. Boyle, 469 U.S. 241 (1985), the Supreme Court held a taxpayer cannot delegate their duty to timely file a tax return or extension to a representative or agent, and later court decisions have strictly interpreted that holding concerning tax professionals. However, if a taxpayer can demonstrate the failure to file the return was due to reliance on the advice of the tax professional with respect to a tax return filing requirement, it may be possible for the taxpayer to establish reasonable cause."

Related: Eide Bailly Penalty Help


Advice Department

Ask Amy: Boyfriend’s CPA dad did my taxes wrong for years - Amy Dickinson, Washington Post:

My boyfriend believes I should not ask to be reimbursed because although his dad offered to do my taxes, he never charged me for the services rendered. I disagree. What is your opinion?


Taxed: You get what you pay for. In my opinion, your boyfriend’s father does not owe you for the mistakes he made.

These tax returns are filed under your name, with information you supply, and you should review the returns and do your due diligence regarding taxes and penalties before signing and submitting your return. The IRS requirements on estimated taxes are clear and readily available through a simple internet search. Penalties should show up on a line on your return, but when reviewing your return, you might have looked only at the “bottom line.”



Tax Crime Watch

Grand Jury Adds 4 More Indictments In Alleged Abusive Trust Tax Scheme - Ronald Marini, The Tax Times. "Clients of the scheme were instructed to pay for personal expenses, including mortgage payments, dining costs and weddings, with money held in the trusts, prosecutors said. They were also told to direct assets including real estate and vehicles to the trusts to avoid the appearance of ownership and to avoid paying income taxes on capital gains from selling the assets."


Former Massachusetts State Police lieutenant sentenced to five years in prison for fraudulent overtime scheme - IRS (Defendant names omitted):

Former Massachusetts State Police (MSP) lieutenant [Defendant] was sentenced today in connection with an overtime scheme dating back to 2015.

Defendant... was sentenced by U.S. District Court Judge Margaret R. Guzman to five years in prison and three years of supervised release. Defendant was also ordered to pay restitution in the amount of $329,163, a fine in the amount of $176,700, as well as a $2,100 special assessment. In December 2023, Defendant was convicted of one count of conspiracy, one count of theft concerning a federal program and four counts of wire fraud.

Prior to trial, in November 2023, Defendant pleaded guilty to four additional counts of wire fraud and 11 counts of filing false tax returns in connection with defrauding a private school attended by two of his children from at least 2016 to 2019 by concealing his income and filing materially misleading financial aid applications.

The concealed income came from a private security business the defendant ran:

Additionally, Defendant spent significant time running his security business, Knight Protection Services, during hours that he was collecting regular MSP pay and overtime pay. From 2012 to 2019, Defendant collected almost $2 million in KnightPro revenue. Of that total, Defendant hid over $700,000 in revenue from the IRS and used hundreds of thousands of dollars in KnightPro income to fund personal expenses, such as golf club expenses, car payments, private school tuition and expenses related to his second home on Cape Cod.

Don't do that.


What day is it?

It's both National Oatmeal Cookie Day and National Raisin Day. I'll just note that oatmeal cookies are an excellent raisin delivery mechanism.

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About the Author(s)

Joe Kristan

Joe B. Kristan, CPA

After 38 years centered on tax consulting for closely held businesses and their owners, Joe is joining Eide Bailly's National Tax Office. Joe's responsibilities include communication, process improvement and training. He is a principal contributor to the Eide Bailly Tax News and Views blog, providing daily updates on tax reform and other tax news. Joe is a Certified Public Accountant and a member of the AICPA Tax Section and Iowa Society of Public Accountants.

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.