Standard Mileage Deduction Rates Should Be Consistent For All Taxpayers

I and others have written tomes about the complexity of the tax code and the burdens that tax law complexity imposes on taxpayers and the IRS alike. Taxpayers (and tax professionals) are often left wanting to pull out their hair, and comedians often mine the tax code for fresh material, especially during tax season.

In my recent report to Congress, I identified one issue that’s a poster child for tax law complexity.

To illustrate the absurdity of the issue, let’s start with an analogy. Have you ever gone into a supermarket to buy a gallon of milk and seen the following sign?

Price of a Gallon of Milk
Customer Price
Men $4.00
Women $3.00
College Students $2.00

I have never seen a sign like that, and I’m guessing you haven’t either.

Yet this is a close analog to the rules governing the deduction for automobile expenses. One would think the cost of operating an automobile (i.e., gas plus wear and tear) would be the same regardless of the circumstance. Yet the current standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical transport, or military relocation purposes are as follows:

Tax Deduction For Automobile Usage
Taxpayer/Purpose Deduction Per Mile
Business Use 65.5¢
Charitable Use 14¢
Medical Transport/Military Relocation 22¢

There are times when tax professionals analyze the intricacies of seemingly absurd legal distinctions and almost see them as logical – until they have to explain them in plain language to a client.
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 Understanding The Gift Giving Tax Excess Gift Giving Could Cause A Tax Surprise

In an effort to keep taxpayers from transferring wealth from one generation to the next tax-free, there are specific limits to the amount of gifts one may give to any one person each year. Amounts in excess of this limit are subject to filing an annual gift tax form. For most of us, this is not something we need to worry about, but if handled incorrectly it can create quite a surprise when the tax bill is due.

The Gift Giving Rule

You may give up to $17,000 (up $1,000) to any individual (donee) within the calendar year 2023 and avoid any gift tax filing requirements. If married you and your spouse may transfer up to $34,000 per donee. If you provide a gift to your spouse who is not a U.S. citizen, the annual exclusion amount is $175,000 for 2023.

Gift Tax Reporting

Amounts given in excess of this annual amount are subject to potential gift tax reporting. The amount of tax is currently unified with estate taxes with a maximum rate of 40%. The donor of the gift is responsible for paying any associated tax. When you exceed the annual gift giving amount, this triggers the need to file a gift tax form with your individual tax return. The excess gift amounts are netted against your lifetime unified credit. If your lifetime gifts do not exceed the credit you may not have additional taxes owed. Here are some instances when a gift tax problem may occur and ways to manage the problem:

Gifts for college. Grandparents like to help out with the tremendous expense of funding a college degree and amounts donated can quickly surpass the annual gift threshold. To avoid the gift tax problem consider making payments directly to the college as this form of payment can be excluded from the annual gift giving limit AS LONG AS the funds are not used to pay for books, room or board on behalf of the donee.
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TLDR: The SEC’s Office of Investor Education and Advocacy continues to urge investors to be cautious if considering an investment involving crypto asset securities. Investments in crypto asset securities can be exceptionally volatile and speculative, and the platforms where investors buy, sell, borrow, or lend these securities may lack important protections for investors. The risk of loss for individual investors who participate in transactions involving crypto assets, including crypto asset securities, remains significant. The only money you should put at risk with any speculative investment is money you can afford to lose entirely. Investors should understand that:

1. Those offering crypto asset investments or services may not be complying with applicable law, including federal securities laws. Under the federal securities laws, a company may not offer or sell securities unless the offering is registered with the SEC or an exemption to registration is available. Similarly, the law requires parties such as securities broker-dealers, investment advisers, alternative trading systems (ATS), and exchanges to register with the SEC, a state regulator, and/or a self-regulatory organization (SRO), such as FINRA. Moreover, entities and platforms involved in lending or staking crypto assets may be subject to the federal securities laws.

Registration of a securities offering requires the issuer to disclose important information about the company, the offering, and the securities offered to the public. Unregistered offerings in crypto asset securities may not provide key information that investors need to make informed decisions. For example, registration typically requires an issuer to include financial statements audited by an independent public accounting firm registered with the Public Company Accounting Oversight Board (PCAOB). Audited financial statements play an important role in making sure investors are provided the information they need to understand the securities in which they want to invest. Issuers of unregistered crypto asset securities offerings might not provide audited financial statements, depriving investors of this key information.
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Disaster Relief And Administrative Convenience

Severe storms have been ongoing in many parts of California since December. I have two family members with severe damage to their homes causing them to have to move out for repairs. And I know many others also suffered significant damage to property.

FEMA and the IRS responded with relief. The IRS has now issued three announcements of which of the 58 counties in California get a postponement of filing and payment and for what periods – generally, if eligible based on county of residence, filing and payment (such as for 2022 returns) is now October 16, 2023.

Each of the three announcements lists mostly the same counties, but the lists are not identical nor the start date. But after these three casualty relief notices, just three of 58 counties in California don’t get filing and payment relief – unless their records are in a county that gets relief and they ask the IRS for the postponed filing and payment date.

Well, California has a population of 39.2 million. The population of the three counties not included in relief are:

Lassen – population 31,000

Modoc – population 8,700

Shasta – population 181,000

These counties represent less than 1% of California’s population.
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Lessons From Family Offices, Private Equity Firms Who Built Tax Organization As Profit Centers

Over 25 years ago, I was retained by a family office and private investment firm on a search for a tax executive. It is an interesting experience to share because it demonstrates it grew from millions of dollars to billions in annual revenue through the last four recessions. A representative family member went to a corporate board meeting of the company they sold. This family member walked into the board meeting with a 100M check and asked the Board an important question. Would their Board consider starting a new company that would only manage the family money? The Board declined the Family’s offer to manage their money since this was not of interest to them. The Family decided to establish their own private investment firm to grow the family money.
Twenty years later, the family’s 100million-dollar check grew into an 8 Billion family investment enterprise. For privacy reasons, I would never disclose the Family Investment company name, but I was a witness to their strategy, growth, and success. How did they turn one hundred million dollars into eight billion dollars in assets for the family members annually over twenty years? Fortunately, I had a front row seat since they retained me to conduct more than twenty searches for their ever-expanding tax team over many years. The real story here is how the organizations looks at the tax function as a profit center. It is all in the sophisticated structuring they plan and then meticulously implement.

According to a survey done by Forbes, ninety percent of wealthy families lose their wealth within three generations. In other words, although one family member works hard to build their wealth, later generations erode the wealth when not managed properly. Families who know how to create wealth and protect it are as important as the original wealth-building family member. With the growth of family offices in-house over the last two decades, they are learning it is critical to their success to have the best experts in the tax profession. If you have any experience working with tax experts in family offices and private investment firms, they employ extraordinarily talented tax professionals who strategically evaluate each deal.

My experience in tax executive search provided insight to a world unknown to most people. The opportunity to communicate with super smart CFOs who work closely with their Tax Executives has been a valuable education. You learn a lot working with the smartest financial and tax advisors around the world. Whenever an organization hires us to search for a tax executive, they want to search the market over in order to be introduced to the smartest people they can find. They are willing to do what it takes to build a tax organization that turns into a profit center. Family offices and private equity firms who build technically talented in-house tax teams are knocking it out of the ballpark. They are certainly challenged to the max during markets like this but they work tirelessly to develop planning strategies that produce results.
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Questions Abound For FinCEN Beneficial Ownership Database

A key part of the Financial Crimes Enforcement Network’s activity under the Corporate Transparency Act is a sprawling database. How to build it – and who should have access?

The Financial Crimes Enforcement Network (FinCEN) has issued a Notice of Proposed Rulemaking to implement provisions of the Corporate Transparency Act (CTA) that govern the access to beneficial ownership information (BOI). The regs kick in Jan. 1 next year.

A rule issued last fall requires most corporations, LLCs and similar entities created in or registered to do business in the U.S. to report information about their beneficial owners to FinCEN. (“Beneficial owner” is generally an individual with at least 25% of the ownership interests of an entity.)

The idea was greater exposure of “criminals, corrupt actors and anyone trying to hide ill-gotten gains in the United States,” with a non-public database for use by law enforcement, financial institutions and other authorities both American (local and federal) and foreign. (Written comments on the notice and proposal will be accepted through Feb. 14.)

When filing BOI reports, the rule requires a reporting company to identify itself and report four pieces of information about each of its beneficial owners: name, birthdate, address and “a unique identifying number and issuing jurisdiction from an acceptable identification document.” Companies created or registered before Jan. 1, 2024, have until Jan. 1, 2025, to file their initial reports; companies created or registered after Jan. 1, 2024, will have 30 days to file after being informed they have to do so.

Interpretation of Section 6015(e)(7)(B): “Newly Discovered or Previously Unavailable Evidence”

Thomas v. Comm’r, 160 T.C. No. 4| February 13, 2023 | Toro, J. | Dkt. No. 12982-20

Summary: This is a case of first impression concerning the meaning of “newly discovered or previously unavailable evidence” as contemplated by I.R.C. § 6015(e)(7)(B): “Any review of a determination made under this section shall be reviewed de novo by the Tax Court and shall be based upon—(A) the administrative record established at the time of the determination, and (B) any additional newly discovered or previously unavailable evidence.”

Sydney Ann Chaney Thomas (Ms. Thomas) and her husband filed joint federal income tax returns for 2012, 2013, and 2014, but did not pay the full amounts of tax shown on those returns. After her husband’s death, Ms. Thomas sought relief from joint and several liability pursuant to I.R.C. § 6015(f) (innocent spouse relief. The IRS denied the request, and Ms. Chaney petitioned the Tax Court seeking a determination under I.R.C. § 6015(e) (relief from joint and several liability on joint return). At trial, the IRS proposed to introduce into evidence certain posts from Ms. Thomas’s personal blog that reflected information about Ms. Thomas’s assets, lifestyle, business, and her relationship with her husband. But, the posts were not part of the administrative record. The IRS learned of the posts only after Ms. Thomas filed her petition with the Tax Court. She objected to the admission of the posts and ultimately moved to strike them from the record wherein the posts were conditionally admitted, pending further review. Ms. Thomas contended that the posts were not “newly discovered or previously unavailable evidence” as contemplated by I.R.C. § 6015(e)(7)(B). The IRS opposed the motion, arguing that the blog posts were “newly discovered” and “previously unavailable evidence” under I.R.C. § 6015(e)(7)(B).

Key Issues: Under I.R.C. § 6015(e)(7)(B), were Ms. Thomas’s blog posts “newly discovered or previously unavailable evidence” when the posts existed before the closing of the administrative record but not discovered by the IRS until the administrative record had closed?

Primary Holdings: The posts are “newly discovered” evidence within the meaning of I.R.C. § 6015(e)(7)(B) and as such were properly admitted. Motion to strike denied. The meaning of “newly discovered” as of 2019 (when section 6015(e)(7) was enacted) was “recently obtained sight or knowledge of for the first time.” The evidence in issue met that definition.

Key Points of Law:

Joint Liability for Spouses. Married couples may elect to file a joint federal income tax return for a taxable year. I.R.C. § 6013. When they do, their tax for that year is based on their aggregate income and deductions, and their liability for any tax due is joint and several, i.e., they are each individually liable, regardless of their respective earnings. I.R.C. § 6013(d)(3).

Innocent Spouse Relief. A spouse who has made a joint return may seek relief from joint and several liability under the procedures established in section 6015. Generally, section 6015(f) permits the IRS to relieve a requesting spouse of some or all of the outstanding joint liability if, taking into account all of the facts and circumstances, it is inequitable to hold that spouse liable for any unpaid tax. A requesting spouse who is dissatisfied with the IRS’s decision about the requested relief “may petition [the Tax Court] . . . to determine the appropriate relief available to the individual under [section 6015].” I.R.C. § 6015(e)(1)(A).

Scope of Review – Section 6015(e)(7). In 2019, a new paragraph (7) was added to section 6015(e): “(7) Standard and scope of review.—Any review of a determination made under this section shall be reviewed de novo by the Tax Court and shall be based upon—(A) the administrative record established at the time of the determination, and (B) any additional newly discovered or previously unavailable evidence.” I.R.C. § 6015(e)(7).

“Additional Newly Discovered or Previously Unavailable Evidence.” “In statutory interpretation disputes, a court’s proper starting point lies in a careful examination of the ordinary meaning and structure of the law itself. Where . . . that examination yields a clear answer, judges must stop.” Food Mktg. Inst. v. Argus Leader Media, 139 S. Ct. 2356, 2364 (2019) (internal citations omitted). And, when the statute does not define a term, the courts “ask what that term’s ‘ordinary, contemporary, common meaning’ was when Congress enacted” the relevant provision. Id. at 2362 (quoting Perrin v. United States, 444 U.S. 37, 42 (1979)). The word “newly” generally is defined to mean “recently” or “lately.” And, the word “discover” generally means “to obtain sight or knowledge of for the first time.” The Federal Rules of Civil Procedure, Rule 60(b)(2)—which requires a reasonable diligence standard for admission of new evidence—is not applicable to section 6015(e)(7)(B), especially since Congress chose a de novo standard of review in section 6015(e) when the court considers a case for the first time following a relatively limited administrative proceeding.

Insights: This Trice opinion regards a matter of statutory interpretation of a Code section enacted by Congress in 2019. Given the de novo review under section 6015(e)—i.e., a standard of review that is to give no deference to underlying proceeding—the Tax Court found that “additional newly discovered or previously unavailable evidence,” as used in section 6015(e)(7)(B), means evidence that may have existed during the administrative phase of the innocent spouse relief tax matter but was not actually discovered by the IRS or the taxpayer until the administrative phase had closed. Thus, those seeking innocent spouse relief under section 6015 are wise to disclose to their counsel (if any) all social media posts that may be used against the spouse who is requesting equitable or legal relief from joint and several tax liability.

Have a question? Contact Jason Freeman And Legal Team, Freeman Law, Texas.

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 Combines Workflows, Organizes Tasks
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GILTI Tax For US Expatriates: What You Need to Know

In this blog post, we will provide a comprehensive overview of the GILTI tax, who is subject to it, and how it affects multinational corporations. We will also discuss the tax rates for GILTI income, and how to comply with GILTI tax regulations. We understand that GILTI tax can be a complex topic, which is why we encourage readers to consult with a tax professional to ensure compliance with the law and to determine their specific tax liability.

GILTI tax is a provision of the U.S. tax code that applies to U.S. taxpayers who own at least 10% of the shares of a controlled foreign corporation (CFC). The purpose of GILTI tax is to discourage profit shifting to low-tax countries by taxing the U.S. shareholder’s share of the CFC’s global intangible low-taxed income (GILTI). GILTI income is the CFC’s income from intangible assets, such as patents, trademarks, and copyrights, that is subject to a low rate of foreign tax.

The GILTI tax is calculated by taking the taxpayer’s net CFC tested income (which is the CFC’s gross income minus certain deductions) and reducing it by a deemed return on the CFC’s tangible assets. This deemed return is calculated as 10% of the CFC’s qualified business asset investment (QBAI), which is the CFC’s average aggregate adjusted bases in its tangible property used in its trade or business. The resulting amount is then multiplied by the GILTI tax rate, which is currently 10.5%.

It is important to note that the GILTI tax is a separate tax from the regular income tax and is calculated and reported on a taxpayer’s Form 8992 (Part of the IRS form 5471).

If the taxpayer takes the money out of the corporation as wages or dividends or if their corporate income tax rate is more than 18.9%, they may not have to pay GILTI tax.
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IRS On Retirement And IRA Required Minimum Distributions

You cannot keep retirement funds in your account indefinitely. You generally have to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or retirement plan account when you reach age 72 (73 if you reach age 72 after Dec. 31, 2022).

Roth IRAs do not require withdrawals until after the death of the owner; however, beneficiaries of a Roth IRA are subject to the RMD rules. Designated Roth accounts in a 401(k) or 403(b) plan are subject to the RMD rules for 2022 and 2023. However, for 2024 and later years, RMDs are no longer required from designated Roth accounts. 2023 RMDs due by April 1, 2024, are still required.

Your required minimum distribution is the minimum amount you must withdraw from your account each year.

You can withdraw more than the minimum required amount.
Your withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts).

Do these rules apply to my retirement plan?
The minimum distribution rules discussed below apply to original account holders and their beneficiaries in these types of plans:
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Real Estate Tax Incentives And Strategies

The wide variety of real estate tax opportunities available can be overwhelming. To make sure you’ve considered all potential sources of benefit, review our expansive checklist.

​​☐​ Accelerated Depreciation

Look-back studies via 3115, best results achieved for properties in service under 15 years
Recall depreciation potential inherent in 754 Step Ups and 1031 Exchanges, as well as tax-exempt property

​​☐​ Bonus Depreciation
100% for properties placed-in-service between 9/28/17-12/31/2022
Acquired assets eligible under the TCJA

​​☐​ Bonus-Eligible QIP (Qualified Improvement Property)
QIP placed-in-service on or after 1/1/2018 is 15-year property and bonus-eligible – major implications for renovations/retrofits

​​☐​ Expensing Options under the Tangible Property Regulations (TPRs)
DeMinimus Safe Harbor (Itemized invoices will be helpful)
Small Taxpayer Safe Harbor
Routine Maintenance Safe Harbor (via 3115)

​​☐​ BAR and Materiality Testing (for Expensing Decisions under the TPRs)

​​☐​ Partial Asset Disposition (PAD Election)
Must be elected in the year the asset was removed from service
Subject to 280B Demolition Rules

​​☐​ Section 179 Expensing Election
Overall Expensing Dollar Limitation for TY 2022: $1.08M
Phase Out Threshold for TY 2022: $2.7M
Must be taken the year the work is placed-in-service

​​☐​ 1031 Exchange
Possibility of associated 15% Safe Harbor

​​☐​ EPAct 179D Deduction
Legacy program still in effect [Inflation Reduction Act (IRA) provisions not in play until TY 2023]
Maximum deduction of $1.88/SF, partial deductions permitted
For properties placed-in-service between 2015-2026, ASHRAE Reference Standard is 90.1-2007
May be claimed retroactively (3115)

​​☐​ Section 45L Credit
Legacy program still in effect [IRA Provisions not in play until TY 2023]
$2,000 credit per dwelling unit
Claiming the credit results in a mandatory basis deduction and corresponding decrease in subsequent LIHTC Credit

​​☐​ ITC (Solar Investment Tax Credit)
Rate determined by when “construction commenced” – 26% in 2021, 30% in 2022

​​☐​ LIHTC (Low-Income Housing Tax Credit)
4% credit (30% subsidy) for acquisitions, rehabs
9% credit (70% subsidy) generally for new construction and major rehabs without additional federal subsidies

​​☐​ HTC (Historic Tax Credit)
Rehabilitation of historic buildings — 20% of qualified rehab costs may be deducted

​​☐​ State-Specific Incentives

Have a question? Contact Bruce Johnson And Capstan Team.


1. While testifying before the Ways and Means Committee on Friday, Treasury Secretary Janet Yellen made a number of remarks that were newsworthy, ranging from how IRS audits will impact the middle class, to her refusal to share details about who will really pay President Biden’s proposed tax hikes. Here are six key moments.

Secretary Yellen committed to make public the IRS’s plan for its $80 billion in new funding to hire 87,000 new agents.
Chairman Jason Smith (R-MO) asked Secretary Yellen at the beginning of the hearing whether she would commit to providing Congress with the IRS’s plan for the $80 billion in new funding provided by Democrats in the so-called “Inflation Reduction” Act. Secretary Yellen promised that the plan would be provided in a matter of “weeks.”

2.Secretary Yellen admitted that the number of taxpayers facing new audits may rise, while the proportion of audits may stay the same relative to “recent years.”
Rep. Adrian Smith (R-NE) asked Secretary Yellen about her directive that is supposed to protect middle-class taxpayers from a rise in audits. Yellen admitted that the number of audits would increase for families – but not the proportion of total audits. Based on Yellen’s answer, Rep. Smith summarized: “So, according to the data, we can expect up to 90 percent of the new audits to be on those making less than $400,000.”

3. Secretary Yellen refused to commit to showing how middle-class families and small businesses would be protected from President Biden’s tax hikes.
Chairman Smith asked Secretary Yellen to share the legislative text of President Biden’s proposed new tax hikes as part of his Fiscal Year (FY) 2024 budget, in order to show how, exactly, the middle class wouldn’t see higher taxes. But Secretary Yellen declined to commit to doing so.

4. Secretary Yellen admitted that Treasury’s proposed bank monitoring program that would surveil Americans’ personal bank transactions could not go forward without legislative approval.
Rep. Drew Ferguson (R-GA) noted to Secretary Yellen that Democrats’ attempt to create a bank surveillance program for the IRS was blocked by Republicans. He asked for assurances from the Secretary that none of the funds that are going to the IRS will be used to implement such a bank monitoring program unless it is directed explicitly by Congress. Secretary Yellen replied, “Of course not.”
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