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Tax the Rich

For many weeks, we’ve been hearing about the IRS’s plans to use the funding provided under the Inflation Reduction Act[i] to increase and expand its compliance and enforcement efforts with respect to the wealthy, high-income earners, partnerships, and large corporations.

According to the IRS, not only will the agency add a significant number of new employees, especially examiners, it will also introduce the use of new technologies, including artificial intelligence, to identify persons who may be skirting their tax obligations.

Continue Reading Hospitals and Community Benefit: Senators See a Shortfall
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Uncertain Future

The Congressional Budget Office (“CBO”) recently released some data for the federal government’s 2023 fiscal year. According to the CBO, the federal budget deficit for the year was $1.7 trillion, or 28-percent larger than it was in 2022.[i]

The CBOs’ report attributed the increase to a combination of lower revenues and higher outlays. Can you guess which expenditure was among those most responsible for the increase? If you said payments of interest on the federal debt, you were right.

Continue Reading Debtor Corp’s S Election: “Property” in Bankruptcy?
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Last Week

Many of you, perhaps most, may have read about a case that will be heard by the U.S. Supreme Court during its current term.[i] The case, Moore v. United States, comes out of the Ninth Circuit Court of Appeals.[ii] The Supreme Court recognized the national significance of the case and granted cert in March of this year.[iii] Within less than two weeks of the taxpayer’s having filed its brief with the Court,[iv] about 25 amicus briefs were filed in support.[v]

Continue Reading Supreme Court to Decide: No Realization Means No Moore Income Tax?
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Ups and Downs

It’s wonderful to be part of a successful business, especially in a strong economy. The owners are probably enjoying a more than just decent return on their investment and, in most cases, are getting along well enough. The business’s employees feel secure in their position; hopefully, they also feel valued.

This rosy picture can change rather quickly, however, when the overall economy, or the industry in which the business operates, experiences a downturn.[i]

Continue Reading The Trust Fund Penalty – Times May be Tough, But Don’t “Borrow” from Withheld Taxes
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Another Mess

Congress has only a few days to avert a “shutdown” of the federal government.[i]

It’s not looking good in the House, as Speaker McCarthy has struggled to bring certain members of the majority into line, while more moderate members of his party have displayed a willingness to reach across the aisle to secure a temporary funding bill.[ii]

Meanwhile, it seems that the members of the minority[iii] have been content to watch the GOP’s drama unfold.

Continue Reading Open Transaction Treatment for The Liquidation of a Partner’s Interest
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Toll the Bells

Since 1995 to the present, the LLC has emerged as the entity of choice for the vast majority of entrepreneurs. This form of business entity owes its success to the flexibility and to the tax benefits that it affords its members.[i]

For example, there are no restrictions on (i) the ownership of equity in an LLC, (ii) the number of members it may have, and (iii) the varying classes of economic interests it may issue its members and its ability to specially allocate items of income, gain, loss and deduction.[ii] In addition, the LLC is treated as a pass-through for federal income tax purposes; it does not pay an entity-level tax on its taxable income – instead, such income is reported by and taxed to its members.[iii]

Continue Reading ESBTs and the Carryover of S Corporation Losses
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“Once More Into the Breach”[i]

Last week, the IRS announced “the start of a sweeping, historic effort to restore fairness in tax compliance by shifting more attention onto high-income earners, partnerships, large corporations and promoters abusing the nation’s tax laws.”[ii]

The IRS added that its efforts “will be driven with the help of improved technology as well as Artificial Intelligence that will help IRS compliance teams better detect tax cheating.”

Continue Reading Self-Employment Tax and the Limited Partner – Substance Over Form, or Something Else?
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Approaching Year End

Which holiday do you dread the most? For me, it has always been, and likely will always be, Labor Day. Of course, with each passing year, anything that I describe as “always” is less meaningful than it was the year before, at least to the extent it relates to me. That said, there is something about entering the final “stretch” of the year that makes me more anxious than usual.  

After years of trying to determine the root cause of this condition, I recognized that it had nothing to do with the beginning of the school year, as I had initially surmised,[i] nor with the pressure to collect delinquent accounts before the year end,[ii] which I find to be the most unpleasant of responsibilities.[iii]

Continue Reading Withholding Taxes: Deferred Comp and Services Overseas
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NY’s Almost There

Back in June of this year, New York’s legislature passed a bill that, if enacted, would create the first state-level public database with information regarding the ownership of limited liability companies (LLCs).[i]

Beneficial owners are of interest to governments, including taxing authorities, because of their economic status as the persons who own or control a company that operates within the government’s or authority’s jurisdiction. Continue Reading Tax Compliance: Self-Assessment, Transparency, and Enforcement

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What’s Next?

Do you feel as challenged as I do when someone asks you to explain the term “Bidenomics”?[i] I know that it is predicated upon the imposition of higher taxes on businesses and their owners, which have not yet materialized.[ii] However one defines it, the White House tells us that it’s working, which some folks say is a good thing.

Continue Reading Sale of Mortgaged Property – Amount Realized or COD Income