The Department of Treasury has published a 120 Page Report on General Explanations of the Biden Administration’s Fiscal Year 2023 Revenue Proposals. After reviewing this report it is apparent why so many wealthy individuals/families are turning to Opportunity Zones.

The Biden Administration wants to do the following:

Reform Business And International Taxation

• Raise The Corporate Income Tax Rate To 28%
• Adopt The Undertaxed Profits Rules
• Provide Tax Incentives For Locating Jobs In U.S.
• Remove Tax Deductions For Jobs Overseas
• Prevent Basis Shifting By Related Parties Through Partnerships
• Conform Definition Of Control With “Corporate Affiliation Test”
• Expand Access To Retroactive Qualified Electing Fund Elections
• Expand The Definition Of Foreign Business Entity To Include Taxable Units

Supporting Housing And Urban Development

• Make Permanent The New Markets Tax Credit
• Allow Selective Basis Boosts For Bond Financed Low Income Housing Credits Projects

Modify Fossil Fuel Taxation

• Eliminate Fossil Fuel Tax Preferences
• Modify Oil Spill Liability Trust Fund Financing And Super Fund Excise Taxes

Strengthen Taxation Of High-Earner Taxpayers

• Increase Top Marginal Income Tax Rate For High Earners To 39.6 Percent
• Reform The Taxation Of Capital Income
• Impose A Minimum Income Tax Rate On Wealthiest Taxpayers

Support Families And Students

• Make Adoption Tax Credit Refundable And Allow Certain Guardianship Arrangements To Qualify
• Provide Income Exclusion For Student Debt Relief

Modify Gift And Estate Taxation

• Modify Income, Estate And Gift Tax Rules For Certain Grantor Trusts
• Require Consistent Valuation Of Promissory Notes
• Improve Tax Administration For Trusts And Decedents’ Estates
• Limit Duration Of Generation-Skipping Transfer Tax Exemption

Close Loopholes

• Tax Carried (Profits) Interest As Ordinary Income
• Repeal Deferral Of Gain From Like-Minded Exchanges
• Require 100% Recapture Of Depreciation Deductions As Ordinary Income For Certain Depreciable Real Property
• Limit A Partner’s Deduction In Certain Syndicated Conservation Easement Transactions
• Limit Use Of Donor Advised Funds To Avoid Private Foundation Payout Requirement
• Extend The Period For Assessment Of Tax For Certain Qualified
  Opportunity Fund Investors
• Establish An Untaxed Income Tax Account Regime For Certain Small Insurance Companies
• Expand Pro Rata Interest Expense Disallowance For Business Owned Life Insurance
• Correct Drafting Errors In The Taxation Of Insurance Companies Under The Tax Cuts And Jobs Act Of 2017
• Define The “Ultimate Purchaser” For Purposes Of Diesel Fuel Exportation

Improve Tax Administration And Compliance

• Enhance Accuracy Of Tax Information
• Address Taxpayer Non Compliance With Listed Transactions
• Amend The Centralized Partnership Audit Regime To Permit The Carryover Of A Reduction In Tax That Exceeds A Partner’s Tax Liability
• Incorporate Chapters 2/2A In Centralized Partnership Audit Regime Proceedings
• Authorize Limited Sharing Of Business Tax Return Information To Measure The Economy More Accurately
• Impose An Affirmative Requirement To Disclose A Position Contrary To A Regulation
• Require Employers To Withhold Tax On Failed Nonqualified Deferred Compensation Plans
• Extend To Six Years The Statue of Limitations For Certain Tax Assessments
• Expand And Increase Penalties For Noncompliant Return Preparation And E-Filing And Authorize IRS Oversight Of Paid Preparers
• Address Compliance In Connection With Tax Responsibilities Of Expatriates
• Simplify Foreign Exchange gain And Loss Rules And Exchange Rate Rules For Individuals
• Increase Threshold For Simplified Foreign Tax Credit Rules And Reporting

Modernize Rules, Including Those For Digital Assets

• Modernize Rules Treating Loans Of Securities As Tax-Free To Include Other Asset Classes And Address income Inclusion
• Provide For Information Reporting By Certain Financial Institution And Digital Asset Brokers For Purposes Of Exchange Of Information
• Require Reporting By Certain Taxpayers Of Foreign Digital Asset Accounts
• Amend The Mark-To-Market Rules For Dealers And Traders To Include Digital Assets

Improve Benefits Tax Administrations

• Clarify Tax Treatment Of Fixed Indemnity Health Policies
• Clarify Tax Treatment Of On-Demand Pay Arrangements
• Rationalize Funding For Post-Retirement Medical And Life Insurance Benefits

Download a copy of the U.S. Treasury 120 page report at this link.

You can dig deep into the report for further clarification. We ask the tax professional community to dig deep and sincerely appreciate your expertise and comments on the various topics. You will understand the impact on your tax clients more than anyone.