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The Tax Cuts and Jobs Act enacted on December 22, 2017 was mostly effective starting in 2018. That was not enough time for anyone to get a good understanding of all of its over 100 changes and the effect and relevance.  The IRS has issued a lot of guidance, but there wasn’t enough time to even get all of this finalized by the due date of 2018 returns. If any practitioners have ever used Reg.…
On December 22, 2017, President Trump signed an Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, commonly referred to as the Tax Cuts and Jobs Act (Public Law 115-97). While there were over 100 hearings on tax reform starting in 2011, and a “unified framework for tax reform” released in September 2017, the final legislation moved quickly over about…
On December 11, the California Department of Tax and Fee Administration (CDTFA) announced that effective April 1, 2019, the South Dakota sales/use tax nexus thresholds will apply in California. I think we’ll see the California legislature offer a law change to increase these thresholds, at least the one for 200 transactions in a year, to be something more realistic for California that also recognizes the burden on the CDTFA to seek out non-compliance vendors around…
The Tax Cuts and Jobs Act enacted December 22, 2017, included over 100 tax changes. In the discussion of tax reform, there was a possibility that the head-of-household filing status would be repealed for simplification purposes. But, it was kept. To try to reduce the errors in claiming this status, Congress expanded the Section 6695(g) preparer penalty to include application of the penalty to a paid preparer who does not exercise the appropriate due diligence…
For a few years, I have noted in update presentations and elsewhere that some gig drivers who only drive occasionally, do it for cash generation or to pass the time, or have other income sources, might really have an activity not engaged in for profit (“hobby”), rather than a business. The tax consequences of the hobby designation are tremendous in that no deductions are allowed starting in 2018. No self-employment tax is owed either, but…
On October 24, 2018, the California Department of Tax and Fee Administration (CDTFA) held an information session on the Wayfair decision’s application in California. California’s statute says we interpret the commerce clause as is done at the federal level. So that interpretation changed with the US Supreme Court’s decision on June 21, 2018 when they found that the longstanding physical presence nexus rule of Quill (1992) is incorrect and unsound. I attended the hearing.  It…
New ways of doing business often challenge tax rules written for a different model. That is a concern expressed for many years by several countries. The concern is that it looks like companies that make money by other than selling tangible goods are profiting by activity in the country, but have no permanent establishment in the country, so owe no income tax. For example, a search engine company makes money when someone uses its search…
There have been many articles on the June 2018 US Supreme Court’s decision in South Dakota v Wayfair. But, that’s not surprising given the decision overrode 51 years of state tax precedence!  I’ve written two article (so far) and a few blog posts. One post was on SalesTaxSupport.com where I asked the question – what if the parties were not billion dollar vendors? I think it is too bad the vendors in the…
On 9/19/18, Congressman Kevin Brady (R-TX), chair of the House Ways and Means Committee sent a letter to the IRS asking them to issue more guidance, as it had promised in 2014, on taxation of virtual currency. Chairman Brady also refers to the 2018 letters from the ABA and AICPA requesting guidance.In the letter, Brady states: “While the Committee appreciates the IRS’s need to undertake enforcement actions to ensure that taxpayers generally meet their tax…
In describing the new $10,000 deduction limit for personal state and local taxes that was added by the Tax Cuts and Jobs Act (P.L. 115-97; 12/22/17), the committee report at footnote 168 refers to a page from the 1944 Cumulative Bulletin (CB) regarding a 1944 law change. To help understand what they were getting at, I recently tracked down that 1944 page. This is a reminder of a few things. First, not everything is on…