Tax News & Views Corporate AMT and Chocolate Roundup

Taxes on the Campaign Trail

Trump Proposes Eliminating Taxes On Overtime - Antonio Pequeño IV, Forbes:

Former President Donald Trump said Thursday he intends to remove federal taxes from overtime pay, marking his latest proposal this presidential campaign to significantly alter federal tax policy.

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Trump did not provide further details on the proposal, which he also framed as “so good” for employers and beneficial for nurses, construction workers, police officers and factory workers.

Unrealized Capital Gains Proposal Faces Uncertain Path - Alexander Riffat, Tax Notes ($):

McCaffery also argued that, as with the Moore case, a tax on unrealized capital gains — or similarly, a tax on wealth — would likely be held up in the courts for years and ultimately dismissed given the ideological makeup of the Supreme Court.

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But in a September 11 report, the Center on Budget and Policy Priorities argued that the plan is similar to taxes already levied on properties and some retirement accounts. “Homes and retirement accounts account for relatively small shares of the income and wealth of very wealthy households, who tend to directly own large amounts of corporate stock or other capital assets,” the report states. “These assets face no comparable required realization requirement or annual tax. Instead they often increase in value, tax-free, year after year, and if they are never sold, the income tax that would be owed on those gains is simply erased when their heirs inherit them.”

State Tax Ballot Measures to Watch in 2024 - Jared Walczak, Katherine Loughead, Manish Bhatt, Andrey Yushkov, Abir Mandal, Joseph Johns, Tax Foundation:

Taxes are on the ballot this November—not just in the sense that candidates at all levels are offering their visions for tax policy, but also in the literal sense that voters in some states will get to decide important questions about how their states raise revenue. North Dakotans will decide whether to abolish the property tax; Washingtonians will determine the fate of the state’s relatively new tax on capital gains income; Oregonians will rule on whether to implement the nation’s highest gross receipts tax rate; Utahns will resolve whether to keep income taxes fully earmarked for education; South Dakotans will choose whether to exempt groceries from the sales tax—and on it goes.

Corporate Alternative Minimum Tax Regs

IRS issues proposed regulations for Corporate Alternative Minimum Tax - IRS:

The Inflation Reduction Act created the CAMT, which imposes a 15% minimum tax on the adjusted financial statement income (AFSI) of large corporations for taxable years beginning after Dec. 31, 2022. The CAMT generally applies to large corporations with an average annual AFSI exceeding $1 billion.

Today’s proposed regulations provide definitions and general rules for determining and identifying AFSI. They also include rules regarding various statutory and regulatory adjustments in determining AFSI; determining if a corporation is subject to the CAMT, including rules for members of a foreign parented multinational group (FPMG) and the determination of the CAMT foreign tax credit.

The proposed regulations.

Proposed Corporate AMT Regs Include Some Partnership Surprises, Kristen A. Parillo, Tax Notes ($):

Because the statute doesn’t define a distributive share, Treasury and the IRS had to come up with a rule on what constitutes a distributive share and how taxpayers should calculate it. The proposed regs adopt a “bottom-up” method under which partnerships would first calculate their AFSI and then allocate each partner a distributive share of it.

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Monte A. Jackel of Jackel Tax Law said a bottom-up method is a departure from the approach set out in section 704(b) and (c). Under the proposed regs, “generally speaking, the distributive share is measured by the economic interest of the applicable entity in the partnership under the financial accounting rules,” he said. “Tax rules do not apply.”

The proposed regs also diverged from subchapter K in the rules dealing with contributions of built-in gain or loss to partnerships, Jackel noted. Treasury and the IRS rejected suggestions to import sections 704(c) and 704(c)(1)(B) in their entirety into the corporate AMT regime, saying it would create “significant complexity and administrative burden for taxpayers, partnerships, and the IRS.”

Blogs and Bits

Coloradans will be able to file their federal tax returns online for free beginning in 2026 - Nick Coltrain, The Denver Post. "Beginning with tax year 2025 — filing for which happens in early 2026 — Coloradans will be able to use the IRS’ free Direct File program to submit their state and federal taxes online for free. Taxpayers can now directly file their Colorado state income taxes for free — separately from federal filings — through the Colorado Department of Revenue website."

Biden Administration Opposed EV Batter Bill - Tax Analysts, Tax Notes ($). "The Biden administration in a September 11 statement expressed opposition to H.R. 7980, saying that the bill, which would stop electric vehicles whose batteries contain elements sourced from prohibited foreign entities from qualifying for a tax credit, would raises taxes, punish manufacturers, and “set back efforts to achieve energy security and combat climate change.”

IRS Offers Help to EOs on Clean Energy Credits, Fred Stokeld, Tax Notes ($). "The IRS is urging tax-exempt organizations that have submitted a registration for elective payment of clean energy investment and production credits but haven’t received a registration number to contact the agency."

Proposed Regs Issued on Exclusion of Tribal General Welfare Benefits - Tax Notes ($). "The IRS has issued proposed regulations (REG-106851-21) addressing the requirements that would apply to determine if the benefits provided by a Native American tribal government program qualify as excluded from the income of the recipients."

False tax returns

Lee’s Summit neurologist pleads guilty to false tax returns - IRS (defendant name omitted):

Defendant owned and operated Forest Park Neurology, LLC, where she practiced as a neurologist from 2012 to 2019. Defendant’s patients sometimes paid cash for her services from 2015 through 2019, but Donato failed to report the full extent of her cash income on her federal income tax returns. Defendant specifically pleaded guilty to failing to report more than $120,000 in cash income in 2017.

By pleading guilty today, Defendant admitted that she filed her federal income tax returns, or caused her returns to be filed, knowing they were false. Each return included a written declaration whereby Defendant acknowledged the return was being filed under penalties of perjury. Defendant also failed to properly report her cash income on her Missouri tax returns during those years.

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