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Archive for Annette Nellen

Tax Challenges For Divorced Parents – Why?

Annette Nellen

We get used to certain rules in the tax system and then think they HAVE to be there. But, often, that is not the case. I think the rules related to divorce are good examples.

Alimony is deductible by the payer and taxable to the recipient. This violates the “fruit of the tree” doctrine from the famous 1930 US Supreme Court case, Lucas v Earl.

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Tax Reform “Revolution” In 1986 But More Needed Today

Annette Nellen

Saturday, October 22, was the 30th anniversary of the Tax Reform Act of 1986 (see 10/18/16 post). My class enjoyed a “Happy anniversary TRA86” cake!

TRA86 represented a lot of changes that mostly broadened the base and lowered rates. When President Reagan signed the bill, he had lengthy remarks including this statement:

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The 30th Anniversary TRA86 Coming October 22

Annette Nellen

Despite lots of hearings, reports, proposals and discussion on tax reform, the last major reform to our federal tax system was signed into law as the Tax Reform Act of 1986 on October 22, 1986. Thus, its 30th anniversary is October 22, 2016!

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Trump’s NOL And The Complexity Of Taxation

Annette Nellen

Lots of news stories and excitement over the first page of three of Trump’s state tax returns for 1995 (NY, NJ and CT)! The New York Times broke the story: “Donald Trump Tax Records Show He Could Have Avoided Taxes for Nearly Two Decades, The Times Found,” New York Times, 10/1/16. It’s a big NOL carryover – over $916 million (almost $1 billion). Several observations:

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Olympic Winnings Exclusion on to the White House – Don’t Sign It!

Annette Nellen

Continuing with a recent theme in this blog – here is an update on federal legislation to not tax winnings of Olympic athletes. That is, the value of the medal and the cash from the U.S. Olympic Committee will be tax free. H.R. 5946 has now passed in the House and Senate, so will soon be off to the White House.

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Bipartisan Blockchain Caucus Launched In Congress

Annette Nellen

The Blockchain which is best known for the “guts” of how bitcoin transactions are verified, recorded and transacted, has uses beyond bitcoin. This decentralized system can be used to verify and process many types of transactions where two or more parties want verification of authenticity and to get information or transfer information or value. IBM and others have been exploring this. The Federal Reserve and others held a conference on the topic in June.

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New Tax Filing Security Protocols

Annette Nellen

New Security Step – IR-2016-124 (9/22/16) – The IRS alerted people filing an extended return electronically for 2015 (due 10/17/16), that they likely would be asked to enter their AGI (Adjusted Gross Income) for 2014. The purpose is to help properly identify the taxpayer. The information release reminds people how to order a tax transcript from the IRS should they not have it.

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Does Small Revenue Loss Justify Bad Tax Law? No

Annette Nellen

More on legislative efforts to give a tax break to winning Olympians(!) …

See my post, “Olympic Medal Taxation Craziness“, for background. This post got a lot of comments both here and on Tax Connections.

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California Prop 55 – Kicking The Can Down The Road

California always has budget problems. In 2012, temporary tax increases were voted in to raise both the state sales tax rate and the top personal income tax rate. These put California at the top among state for high tax rates. These provisions expire soon, but budget problems remain. So, Prop 55 on the November 2016 ballot calls for extending the income tax rate increase.

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Tax Technology Scams—Protect Yourself

Annette Nellen

Technology has made tax compliance a lot simpler and more efficient. I believe at some point, tax compliance and payment will be a just-in-time activity we can easily do from our smart phone or watch.

But, computer systems and networks need to be extremely secure due to the highly sensitive data and the thieves who work 24/7 to get the data. Just this week, the IRS alerted tax professionals of thieves and scammers trying to get control of practitioner computers to avail themselves of client tax data.

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How Many Times To Tax Business Income?

Annette Nellen

A recent post (8/26/16) on the Tax Justice website was titled – Why We Must Close The Pass-Through Loophole? That caught my attention as I was trying to think what the “loophole” might be? A loophole is a provision that can be used beyond its intended purpose because the rule is not written specifically enough. When a rule is being used as intended, it is not a loophole. For example, sometimes the mortgage interest deduction is called a loophole, but it is not. People deducting interest on the mortgages on their primary and vacation homes is using the rule as intended.

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Olympic Medal Taxation Craziness

Annette Nellen

Every four years we usually see at least one bill introduced in Congress to make Olympic medals and related prize winnings (such as cash) non-taxable to the athletes. Why? There is no good reason for excluding this prize income. All prizes are taxable because they are an accession to wealth which is what our income tax system is based upon. If you win a raffle or win on Jeopardy!, the prizes are taxable.

Why should an Olympic medal be different?

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