Robert Ozmun’s Post

While extending the TCJA as-is would benefit most taxpayers, new Tax Policy Center estimates show that by far the biggest winners would be those making $450,000 or more. https://tpc.io/3XVhsu9

Recent California Legislation Will Have Taxpayers Considering New Tax Planning Strategies New budget legislation, SB 167, passed by the California Legislature on June 13th and signed into law by the governor on June 27, 2024 will have significant impacts on taxpayers by suspending net operating loss (NOL) deductions and limiting the utilization of credits from 2024 through 2026. Let me know if you have any questions! #taxcredit #taxcredit #taxincentive #taxincentive #californialegislation #taxplanning #nol #carryforward #refundabletax #SB167

On Sept. 12, 2024, the IRS and Treasury released a notice of proposed rulemaking, REG-112129-23 (the Proposed Regulations), which proposes rules addressing the application of the corporate alternative minimum tax (CAMT). The Proposed Regulations largely incorporate and expand on the interim guidance released by the government in prior notices (see below), albeit with some changes based on discussions with and comments from taxpayers. https://lnkd.in/e9QepZmi

While extending the TCJA as-is would benefit most taxpayers, new Tax Policy Center estimates show that by far the biggest winners would be those making $450,000 or more. https://tpc.io/3XVhsu9

As I have stated here a few weeks ago in response to an earlier Tax Notes story....The government and an amici assume that one must take context and policy into account in interpreting words in a statute. And yet, some do not agree with that approach and hold instead that the words used are the words used regardless of whether you get an absurd policy result. Such was the case in Gitlitz. See https://lnkd.in/gBkvEYJg. The US Supreme Court there interpreted the words “item of income” to Include excluded from gross income COD even though the end result from a policy perspective would have been very bad for the IRS.  Some would read the words “limited partner as such” or “limited partner” as meaning what those words describe-a state law limited partner. It could mean “passive income” but, just like in Gitlitz, the words used are the words used. It would seem that this issue would be a critical component of resolving this issue. The Gitlitz court stated: “[C]ourts have discussed the policy concern that, if shareholders were permitted to pass through the discharge of indebtedness before reducing any tax attributes, the shareholders would wrongly experience a "double windfall": They would be exempted from paying taxes on the full amount of the discharge of indebtedness, and they would be able to increase basis and deduct their previously suspended losses….Because the Code's plain text permits the taxpayers here to receive these benefits, we need not address this policy concern.” Tax Notes Holland and Knight IRS, Office of Chief Counsel

Beware: IRS to Crack Down on Partnership Basis Shifting; Plus, Supreme Court Upholds Foreign Income Tax The Internal Revenue Service (IRS) has announced plans to eliminate the tax break associated with partnership basis shifting through a combination of regulatory changes and increased enforcement. And, in a 7-2 decision, the U.S. Supreme Court has upheld a lower court decision confirming the validity of a tax on U.S. citizens’ earnings received outside the country. Click below to learn more about these two topics.

The Internal Revenue Service (IRS) has issued proposed regulations for the Corporate Alternative Minimum Tax (CAMT), which was introduced as part of the Inflation Reduction Act of 20221. This new tax applies to certain large corporations with average annual adjusted financial statement income exceeding $1 billion over a three-year period. Key points of the proposed regulations include: -The CAMT is effective for tax years beginning after December 31, 2022. -It imposes a 15% minimum tax on adjusted financial statement income of applicable corporations. -The regulations provide guidance on various aspects of the CAMT, including: -Determining applicable corporation status -Calculating adjusted financial statement income -Applying the CAMT to specific transactions and industries -The IRS aims to provide clarity and address concerns raised by stakeholders during the implementation process. -The proposed regulations are open for public comment, with a deadline of 60 days after publication in the Federal Register. -A public hearing on the proposed regulations is scheduled for March 25, 2024. The IRS encourages affected taxpayers and practitioners to review the proposed regulations and provide feedback to help refine and improve the final rules for implementing the Corporate Alternative Minimum Tax.

A few years ago, the Tax Cuts and Jobs Act (TCJA) introduced significant changes to the tax landscape that continue to impact high-net-worth individuals and business owners. One notable adjustment was the temporary imposition of a cap on state and local tax (SALT) deductions, limiting taxpayers to a $10,000 deduction annually. Partner Kris Yamano provides detail on the implications of this limitation for some taxpayers: https://lnkd.in/gvSDrPjB

When you see a tax demand notice, it’s that “OMG, what now?!” moment! Have you received a demand for claiming rebate? Here’s why and what you need to know! 🔹 What Changed? Recent updates in the Income Tax Return (ITR) utility (July 5, 2024) restrict Section 87A rebate on special-rate incomes like short-term capital gains (STCG) and long-term capital gains (LTCG). This change means taxpayers can no longer claim rebate on tax charged at special rates, even though it was previously allowed. 🔹 Why Are Tax Demand Notices Being Issued? Taxpayers who filed returns with STCG/LTCG rebates before the update are now receiving tax demands. The utility change disallowed these claims, retroactively applying the new restriction. 🔹 What Should Taxpayers Do? Check any demand notice carefully and either pay the required tax or file a rectification request with your jurisdictional officer if there’s a discrepancy. Seek professional advice to navigate these changes, especially if your return was filed before the utility update. It remains to be seen if the new tax code can truly make compliance easier or if it will simply shift the complexity from one set of rules to another. Only time will tell if the effort to broaden the tax base will succeed in simplifying or if it will demand additional resources for compliance. The law is meant to be simple and straightforward – let’s hope it gets there soon! #incometax #notice #demand