Tax News & Views Digital Assets and the New Year Roundup

Happy New Year!

Top Federal Tax Cases To Watch In 2025 - Kat Lucero, Law 360 Tax Authority ($):

Over the next year, tax practitioners will be closely monitoring suits that challenge the IRS' use of the economic substance doctrine, take advantage of the U.S. Supreme Court's landmark decision curbing federal agencies' regulatory authority and dispute the government's handling of worker retention credits.

The government's upcoming appeal of a nationwide injunction that temporarily paused federal requirements to report entities' beneficial ownership information is another case many practitioners will be tracking.

A Happy New Tax Year look at 2025’s tax brackets - Kay Bell, Don't Mess with Taxes:

2025 tax bracket overview: For tax year 2025, the top 37 percent tax rate for individual single taxpayers will apply to those with incomes greater than $626,350. Married filing jointly couples who make a combined $751,600 will fall into that top tax bracket.

The other six tax brackets will affect the following income levels —

- 35 percent for incomes over $250,525 ($501,050 for married couples filing jointly);
- 32 percent for incomes over $197,300 ($394,600 for married couples filing jointly);
- 24 percent for incomes over $103,350 ($206,700 for married couples filing jointly);
- 22 percent for incomes over $48,475 ($96,950 for married couples filing jointly);
- 12 percent for incomes over $11,925 ($23,850 for married couples filing jointly); and
- 10 percent for incomes $11,925 or less ($23,850 or less for married couples filing jointly).

Digital Assets

IRS Provides Basis Identification Relief for Digital Assets - Mary Katherine Browne, Tax Notes ($):

The government is allowing taxpayers to use additional methods to identify cryptocurrency transactions for digital assets that are in the custody of brokers for calendar year 2025, providing the relief Coinbase Global Inc. requested.

Notice 2025-7, 2025-5 IRB 1, issued December 31, 2024, provides temporary relief to taxpayers selling, disposing of, or transferring digital assets by providing them additional identification methods under section 1012.

Basis of Digital Assets Sold Cost Flow Assumptions - IRS Releases Temporary Specific Identification Relief for 2025 - Ed Zollars, CPA, Current Federal Tax Developments:

Rev. Proc. 2024-28 provides a safe harbor that taxpayers can use to allocate the basis of digital assets to specific wallets or accounts as of January 1, 2025. This is relevant to the basis identification rules under Reg. §1.1012-1(j) because it addresses how taxpayers should transition to the new rules which require basis to be determined on an account-by-account basis, rather than using a universal or multi-wallet approach.

Incoming Administration & Taxes

Green-Energy Firms’ Pitch to Trump: You’re Going to Need a Lot of Power - Jennifer Hiller, The Wall Street Journal:

Solar, wind and battery storage have been on a tear in recent years, with investment boosted by tax credits in the Inflation Reduction Act, President Biden’s signature climate law. About $75 billion in new projects connected to the grid between September 2022 and March, according to the American Clean Power Association.

Trump has called the IRA a scam and wants it repealed. His victory has plunged the renewable-power industry into a period of policy uncertainty. Few expect a wholesale repeal, but parts of the IRA are likely to be scrapped.

Tax Bill Uncertainty May Dampen Business Activity - Alexander Rifaat, Tax Notes ($):

A delay by Congress in addressing the expiring tax provisions enacted as part of the Tax Cuts and Jobs Act could negatively affect business investment in 2025, observers warn.

...

While President-elect Trump has come out in favor of not only extending those provisions but also additional tax incentives for businesses, Republicans in Congress have deliberated on whether to include the tax provisions as part of one reconciliation bill or to propose two reconciliation bills — one focused on immigration and national security and a later one addressing taxes.

Reform, Expansion of Opportunity Zone Program Possible in 2025 - Cady Stanton & Doug Sword, Tax Notes ($):

The Opportunity Zones section of the Tax Cuts and Jobs Act temporarily authorized tax incentives for start-up businesses as a way to spur investment in economically distressed areas. While the program isn’t scheduled to sunset at the end of 2025 like many of the other 2017 tax law’s provisions, the deferral period for capital gains tax on the investments ends December 31, 2026.

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Opportunity Zone proponents have touted the program as a chance to spur private investment in low-income neighborhoods, including through improving housing affordability. Proposed chances for expansion of the program include extension of the deferral date for tax liability on capital gains from the investments, removing zones where incomes are well above the national median, and beefing up reporting requirements.

Direct File Expected to Face Scrutiny by Incoming Administration - Benjamin Valdez, Tax Notes ($):

Just over 140,000 taxpayers successfully filed returns through the pilot, although the IRS estimated as many as 19 million were eligible. The program has been expanded from 12 states to 24 for 2025 and will support reporting of Form W-2 wages and some Form 1099 income, including interest and retirement income.

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While neither President-elect Trump nor his new choice to lead the IRS, former Missouri Rep. Billy Long, has vocalized an opinion on Direct File, some observers think the incoming president will likely be attuned to what Congress wants. Several House Republicans asked Trump on December 10, 2024, to end Direct File on his first day in office, potentially through executive order.

Tax Trouble

Campbell home care company executive sentenced to one year and one day in prison for employment tax violations - IRS (defendant and company name ommitted):

For fourth quarter of 2014 through the third quarter of 2015, Defendant did not pay any of the withheld taxes to the IRS. And for the third quarter of 2014, Defendant only paid part of the withheld funds. In total, Defendant did not pay more than $1 million in taxes owed to the IRS during these five quarters. During the same time, Defendant used Company's funds to pay his personal expenses.

Defendant also filed false personal income tax returns for tax years 2014 and 2015. On those returns, Defendant falsely claimed credit for federal tax withholdings from wages he received from Company, knowing that these withholdings had not been paid over to the IRS. In total, Defendant caused a tax loss to the IRS of $1,177,947.

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Tax News & Views Digital Assets and the New Year Roundup

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