Key Takeaways
- Budget Reconciliation Bill
- Shrinking Deficit
- Booming Economy?
- ACA Deal?
- Additional Corporate AMT Guidance
- No Additional Spinoff Rules
- Upcoming Borrow Fee Proposed Regulations
- Global Minimum Tax
- Plans for Foreign Currency Relief
- IRS Data Sharing
- Questions on Cryptocurrency
- Clarified Definition of Tipped Employee
- In the Courts
- National Dress Up Your Pet Day
Webinar Incoming! This coming Friday, January 16, at 10:30 a.m. Central time, tune in to a Tax Update Webinar for critical reminders and new developments heading into the tax filing season. This session will feature Alex Parker, our man in D.C., on the current situation in Washington. Also participating are firm experts in accounting methods, international tax, transfer pricing, and information reporting. No charge, 2 hours CPE available. Register here.
Budget Reconciliation Bill
House GOP Floats Framework For 2nd Tax, Reconciliation Bill – Asha Glover, Law 360 ($):
The Making the American Dream Affordable Again reconciliation framework, introduced by the Republican Study Committee, proposes eliminating capital gains tax on rental home sales to tenants to encourage property sales, enacting an excise tax on colleges that allow people assigned male at birth to compete in women's sports and reauthorizing the Work Opportunity Tax Credit, according to the framework.
Shrinking Deficit
US Deficit Shrank to $1.7 Trillion in 2025 on Tariff Jump – Daniel Flatley, Bloomberg ($):
The deficit for the month of December was $145 billion, Treasury Department data showed on Tuesday. For the first three months of the 2026 fiscal year, which began Oct. 1, the shortfall came in at $602 billion. Last month saw customs duties slow to $28 billion, the smallest haul since July.
Booming Economy?
Trump Credits ‘Mister Tariff’ for the Country’s Strength. Economists Beg to Differ. – Ana Swanson, New York Times:
…
But there is little evidence in the data to support the idea that tariffs are conveying broad economic benefits. U.S. growth has been strong in recent months, but economists say that has been driven primarily by the boom in artificial intelligence. The construction of vast data centers is boosting investment, while soaring A.I. stocks are making Americans who invested in the stock market richer, encouraging more spending on goods and services.
ACA Deal?
Timing for Senate ACA Deal Slips as Trump Announces His Own Plan – Erin Durkin, Caitlin Reilly, and Lillianna Byington, Bloomberg ($):
Sen. Bernie Moreno (R-Ohio), who has been at the center of discussions on a health deal, said timelines are fluid but that they must “get it done” by the end of the month. President Donald Trump said during a speech in Detroit Tuesday that he would release his own health plan later in the week, repeating his call to send money straight to Americans and not to insurance companies. He called enhanced premium tax credits a “corrupt payoff to the insurers.”
Additional Corporate AMT Guidance
Expect Another Notice on Corporate AMT, Treasury Official Says – Kristen A. Parillo, Tax Notes ($):
The government’s goal is to finalize the corporate AMT regs in 2027, Kevin Salinger, Treasury deputy assistant secretary for tax policy, said January 13 at the New York State Bar Association Tax Section’s annual meeting.
Treasury Plans More Preliminary Guidance on Book-Income Tax – Michael Rapoport, Bloomberg ($):
That will be a prelude to a full reproposal of regulations to implement and calculate the corporate alternative minimum tax, expected in late 2026, said Kevin Salinger, deputy assistant secretary for tax policy, speaking at the New York State Bar Association’s annual meeting.
No Additional Spinoff Rules
Further Broad Spinoff Rules Aren’t Planned, IRS Official Says – Michael Rapoport, Bloomberg ($):
Instead, the IRS is encouraging companies to seek individual private letter rulings to get approval for their transactions, said Robert Liquerman, special counsel in the IRS Office of Associate Chief Counsel (Corporate), speaking at the New York State Bar Association’s annual meeting. PLRs are company-specific pre-approvals of a company’s actions from a tax perspective.
Upcoming Borrow Fee Proposed Regulations
Input Sought on Scope of Borrow Fee Guidance – Kristen A. Parillo, Tax Notes ($):
Suggestions on how to limit potential abuse from any expansion would also be helpful, Erika Nijenhuis of the Treasury Office of Tax Policy said at the New York State Bar Association Tax Section’s annual meeting January 13.
Global Minimum Tax
Treasury Reiterates Book-Tax Changes Won’t Affect Global Deal – Michael Rapoport, Bloomberg ($):
The “side-by-side” agreement reached last week that carves out US companies from the global tax “is permanent, it’s not conditional,” said Teisha Ruggiero, an attorney-adviser in Treasury’s Office of the International Tax Counsel, speaking at the New York State Bar Association’s annual meeting.
Global Min. Tax Remains Robust After US Deal, OECD Says – Kevin Pinner, Law 360 ($):
A deal published last week that treats the U.S. tax system separately under the 15% global minimum tax maintains the overarching goal of reducing uneconomic decision-making, officials from the OECD's Center for Tax Policy and Administration said. Their remarks came during an online panel they hosted to discuss the deal.
Plans for Foreign Currency Relief
IRS Says Foreign Currency Relief Coming for 2025 Returns – Michael Smith, Tax Notes ($):
The government is drafting regulations that would allow taxpayers to use a modified version of the 1991 method of calculating foreign currency gains or losses under section 987, Peter Blessing, IRS associate chief counsel (international), said January 13 at the New York State Bar Association Tax Section’s annual meeting. The modifications are designed to eliminate and reduce burdens in a way that will not have a large impact on fiscal collection but are intended to be out soon enough to allow taxpayers to file without extensions, he said.
IRS Data Sharing
IRS Appeals Injunction Against Immigration Data Sharing – Nathan J. Richman, Tax Notes ($). “Government defendants are asking the D.C. Circuit to weigh in on the stay and preliminary injunction preventing the IRS from sharing taxpayer addresses with U.S. Immigration and Customs Enforcement.”
Questions on Cryptocurrency
Sen. Warren Questions SEC On Crypto In 401(k) Plans – Kellie Mejdrich, Law 360 ($). “Sen. Elizabeth Warren sent a letter to the U.S. Securities and Exchange Commission in advance of a banking committee vote on cryptocurrency market structure legislation, asking how the agency will protect investors as the administration also pushes to broaden access to cryptocurrency in 401(k) retirement plans.”
Clarified Definition of Tipped Employee
House Tipped Worker Bill Unlikely to Affect OBBBA Deduction – Katie Lobosco, Tax Notes ($):
The Tipped Employee Protection Act (H.R. 2312) would amend the Fair Labor Standards Act definition of a tipped employee.
GOP Spikes Legislation Widening Tipped Worker Wage Loophole – Parker Purifoy & Maeve Sheehey, Bloomberg ($):
The House on Tuesday failed to pass the Flexibility for Workers Education Act (H.R. 2262), under which employers would be able to hold voluntary job-related trainings after hours without compensating employees if the training took place outside the worker’s normal hours. The measure was killed by six Republican members joining House Democrats opposing it on the floor.
In the Courts
IRS Defeats Whistleblower Award Case Over Target's Books – Kat Lucero, Law 360 ($):
The Internal Revenue Service's investigation could not confirm the person's allegations that the retail giant artificially inflated its cost of goods to lower its tax label income, using the last-in, first-out, or LIFO, inventory accounting method, according to Judge James Halpern.
What Day is it?
It’s National Dress Up Your Pet Day! Delight both you and your pet by trying on a fun costume!
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