The New England Accounting Advisor

President Biden’s latest budget proposal calls again for higher corporate and individual tax rates, and proposes a new “Billionaire’s Minimum Tax” that would subject wealthy individuals to a minimum 20% tax rate on income that includes unrealized capital gains. These and other tax proposals were outlined in the Treasury Department’s annual Green Book on March 28. The Green Book represents the President’s “wish list” for tax policy, while Congress must draft and pass any associated legislation. Although the fate of the Build Back Better Act (BBBA) remains stalled in the Senate, the Green Book is intended to help shape ongoing and future negotiations in Congress.

The major points from this year’s Green Book and some observations follow. We begin with major business provisions, and continue with individual provisions most likely to be relevant.

Topics: individual tax, tax, President Biden, corporate tax, Biden Administration, Billionaire’s Minimum Tax

An increasing number of states are embracing an entity-level income tax on pass-through entities (PTEs) as a way to mitigate the $10,000 deduction limit for state and local income taxes (SALT cap). Congress imposed the SALT cap on individuals as part of the tax reform law in 2017. These PTE tax (PTET) regimes effectively bypass the SALT cap, but introduce novel considerations for companies that prepare U.S. GAAP financial statements.

Topics: tax, pass-through entities, SALT Cap, PTE, PTET, PTE Tax

Last October, the IRS announced changes in documentation requirements for claims made with respect to the credit for Increasing Research Activities (the research and experimentation or R&D Credit). Together with an October memorandum from the IRS chief counsel’s office and subsequent procedural guidance in January, the IRS now requires that taxpayers must submit at least five pieces of information with an amended return or administrative adjustment request (AAR) that claims an R&D Credit, in order for claim to be valid. These new documentation requirements apply for claims postmarked on or after Jan. 10, 2022.

Topics: tax, R&D, research and development tax credit, research credit claims

Let’s face it—tax filings have been grueling the past several years. In the 2019 tax season, extensive and swift changes under the tax reform law known as the Tax Cuts and Jobs Act upended conventional planning and understandings. Then came 2020, when tax filers and preparers had to contend with the COVID-19 disruption, which brought about more tax law changes and threw a wrench into the ability of the IRS to process returns.

Topics: tax, S Corporation, Tax Cuts and Jobs Act, tax legislation, pass-through entities, Cryptocurrency, PPP, Payment Protection Program, ERTC, PTE

The House of Representatives voted 228-206 on Friday to pass a key bipartisan measure underpinning President Biden’s infrastructure initiatives. The Infrastructure Investment and Jobs Act (IIJA), which had been approved by the Senate in August, now awaits President Biden’s signature.

Topics: tax, House of Representatives, Tax Cuts and Jobs Act, tax legislation, Build Back Better, Treasury Department’s Green Book, Build Back Better Act, High-Income Individuals, Green Energy Credits and Incentives, Funding the Internal Revenue Service, BBB Act, Domestic, corporate tax reform, Social Safety Net Spending Provisions, Improving Taxpayer Compliance, INTERNATIONAL, infrastructure bill

On Oct. 28, 2021, the White House released its “Build Back Better Framework.” Later that day, the House Ways and Means Committee issued the “TEXT OF H.R. 5376, BUILD BACK BETTER ACT,” which fleshes out the spending and tax proposals summarized in the White House release with meaningful legislative changes. This article analyses the most relevant tax provisions of the Build Back Better Act (BBBA). At the time of publication, the House has yet to set a date for a  vote on the BBBA or its complementary legislation. The $1.9 Trillion bipartisan infrastructure bill passed by the Senate on Aug. 3 by a vote of 69-30.

Topics: tax, House of Representatives, Tax Cuts and Jobs Act, tax legislation, Build Back Better, Treasury Department’s Green Book, Build Back Better Act, High-Income Individuals, Green Energy Credits and Incentives, Funding the Internal Revenue Service, BBB Act, Domestic, corporate tax reform, Social Safety Net Spending Provisions, Improving Taxpayer Compliance, INTERNATIONAL

On Sept. 30, 2021, the Massachusetts legislature enacted an elective pass-through entity (PTE) tax. The PTE tax is intended to enable Massachusetts taxpayers that are PTE owners to deduct state and local (SALT) taxes exceeding the annual $10,000 deduction limitation ($5,000 for married individuals filing separately) for federal income tax purposes.

Topics: Massachusetts, tax, pass-through entities, PTE

On Dec. 27, 2020, President Trump signed into law the Consolidated Appropriations Act (the Act) that had been passed with overwhelming majorities in both Houses of Congress on December 21. Trump delayed the signing as he pursued, with the approval of Democratic members of Congress, an increase in the amount of Recovery Rebate checks from $600 to $2,000. Without explanation or fanfare, the President signed the bill to the surprise of members of both parties. On Dec. 28, the House passed a stand-alone bill to increase the stimulus payments to $2,000, but with voting along party lines it is expected to die in the Senate.

Topics: individual tax, tax, tax deductions, Charitable contribution planning, Paid Family Leave, Paycheck Protection Program, PPP Loan, Stimulus, Employee Payroll Tax Deferral, Consolidated Appropriations Act

The $2.2 trillion economic stimulus package, the Coronavirus Aid, Relief, and Economic Security (CARES) Act includes many tax and non-tax provisions to assist individuals, businesses, and the unemployed. Tax changes in the CARES Act and other tax law changes that have come about to offset the economic impact of the COVID-19 pandemic create many potential issues to consider with accounting, from going concern evaluations to financial statement disclosures. For public companies with quarterly financial filings to prepare, there will be a number of income tax accounting implications that will need to be addressed now.

Topics: tax, public company, Taxes, COVID-19, CARES Act, Coronavirus Aid, Relief, and Economic Security Act, SEC, Public Companies

Taxpayers are still feeling repercussions far and wide from the extensive changes to the tax code made by the 2017 law known as the Tax Cuts and Jobs Act (TCJA). Because the TCJA was passed so quickly, many of its nuances required clarification, and this year’s tax reform-related updates are certain to affect your company’s planning. While a fix for qualified improvement property is still in the works, the following provisions have received final and proposed regulations in 2019.

Topics: tax, Taxes, Tax Reform, Tax Cuts and Jobs Act, TCJA