All Articles - Think Outside the Tax Box

CURRENT EDITION

By Annette Nellen, CPA, CGMA, Esq.

Inflation Reduction Act 2022 Energy Tax Incentive Considerations

The Inflation Reduction Act of 2022 (P.L. 117-169; 8/16/22) could easily have been named the Energy Incentives Act of 2022. Over 20 provisions in the Act provide tax credits or special deductions to encourage the production and use of clean energy. The cost of these energy provisions over ten years is about $271 billion. In contrast, the ten-year revenue projection for the corporate AMT and one percent excise tax on certain stock buybacks is about $296 billion.

Most of the energy credits are for businesses and are specialized such as for the production of clean hydrogen or sustainable aviation fuel or zero-emission nuclear power production. Four credits are designed for individuals including three revised credits and one entirely new one (§25E, Previously-owned clean vehicle credit).

This article highlights key aspects of the credits and special energy provisions as a whole, offers tips for dealing with the complexities that exist in these IRA 2022 rules, and provides suggestions to help individuals obtain the greatest tax savings from the new and revised energy credits and rebates. A few charts are included to aid in understanding these credits.

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Why Many Tax Pros Want a Stronger IRS

Early last month Adam Markowitz faced a storm of criticism over a tweet that suggested that people upset about increased IRS funding should maybe just be compliant. It got rather ugly. #TaxTwitter came to his defense despite some of us disagreeing with details of his tweet. All of my GOP friends who are worried about 87,000 IRS enforcement agents coming after the little guy... How about just don't cheat on tax returns? A fully truthful and accurate tax return is bulletproof in an audit. I never understood the fear of an IRS audit. Don't lie. Period. For somebody whose return has more than a few moving parts there is a lot of effort in putting together information for an audit. And there will usually be some things that can be viewed differently. Further you can sometimes catch the agent from hell. AFH is sure that your client is a crook and it will be hard to convince them they should go fight crime someplace else. With all that said many tax pros would still like an IRS that audits more, although they might want them to fix some other things first. To learn more about what is expected in the coming months, learn more here.

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The Inflation Reduction Act Overview: A Brief Guide for the Non-Tax Professional

Question: How can I explain the recently passed Inflation Reduction Act to my tax planning clients? Answer: The simplest solution I've found so far is to break the Act into three components: tax credits for electric vehicles, tax credits for home improvements, and how the IRS will use the new funds allocated to them. From there, it's a simple matter of identifying some of the core concepts behind each category. To save you some trouble, I've created new client alerts to illustrate how one might do that! Keep reading to learn more!

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What Is This Worth, Exactly? Determining Fair Market Value of Non-fungible Tokens for Charitable Schedule A Deductions

Value is in the eye of the beholder; or was that beauty? This is especially true for those infamous monkey portraits on the internet. Non-fungible tokens (NFTs) have exploded in popularity and can carry with them substantial tax consequences. Due to the volatile nature of the digital asset market and coupled with the lack of similar assets, it can be exceptionally difficult to determine the fair market value (FMV) of NFTs. Gift giving and donations can become much more complicated when NFTs are involved. New Fangled Technology For the noobs, an NFT is a type of cryptographic token that exists on a blockchain. As the name suggests, the tokens are not fungible, meaning each asset is unique and can't be interchanged for one another, the way that dollars or bitcoins can. Every NFT represents a unique asset with a unique value, however, determining what that value is can be quite difficult; The market for buying and selling NFTs can be extremely volatile. Some NFTs may quickly lose value or have no value at all. When a taxpayer donates an NFT to a qualified charitable organization as a way to reduce tax, the FMV is a required piece of information. To find out how to do this properly, keep reading.

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The Inflation Reduction Act Tax Credits Course

The Inflation Reduction Act of 2022 expanded existing energy credits and created brand new ones. There are now several new ways tax professionals can help taxpayers save thousands of dollars a year by planning for these tax credits. In this webinar, we will cover the credits likely to be used by individuals and small businesses. We will also discuss tax planning considerations and areas in need of additional guidance.

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Charitable Deduction Rules – No Excuses – Acknowledgements

There is a story I heard even before I started doing tax work when I was a hotel night auditor. It was about a guy named Joe who ran a luncheonette where he also sold newspapers and candy bars and the like. Joe’s Place was across the street from Our Lady of Perpetual Responsibility, a Catholic parish. Joe would see Father Mulcahey carrying a heavy bag every Monday morning. The good father was heading to the bank with the Sunday collection. One day Joe invited him in for a cup of coffee and proposed a win/win. Joe was always running out of change on Sundays. So how about if Father Mulcahey has the ushers count the coins and bring them over, Joe would write a check for the coins, and the father will just have Joe’s check to bring to the bank on Monday? Then, Joe would deduct the check written to the church as a charitable deduction. It was a great plan and it worked well for several years until the IRS audited Joe and a skeptical IRS agent called on Father Mulcahey about Joe apparently being Our Lady’s biggest donor. After all, he had the canceled checks. So if a canceled check to church on Sunday won’t work to document your charitable deduction, what will? Keep reading to find out!

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Who You Gonna Call? Not the IRS – A Guide to IRS Online Tools

You don’t have to be a tax geek to know the IRS has trouble picking up the phone. Old habits die hard. If you have a tax question, what do you do? You call the IRS. Good luck with that. You’ll be on hold for a long time if you can get through at all. The IRS initiated a call-back feature, but it’s not always available. The hold music is uninspiring; sometimes, after holding for hours, you get the dreaded “courtesy disconnect.” Yikes! Let’s face it. The IRS has a full plate; years of doing more with less have crippled the agency. Congress is quick to excoriate the IRS for poor service but keeps piling on more tasks (without necessary funding). Luckily, the IRS is working hard to provide more and better online applications and resources. There’s a lot out there, some well-known, some not so well-known, click here to take a tour and discover which shortcuts will help you most.

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Client Alert

Self Rental Tax Dilemma: Are Your Deductions at Risk?

It’s challenging at times to understand the passive activity loss guidelines. Many taxpayers are not fully aware of the rules or how they could affect investments and transactions. There are some details that, if not taken care of in advance, could have serious detrimental tax effects. The way to handle self-rentals in relation to the passive activity loss rules is one of these subtleties. Although many professionals know the self-rental regulations, there are some circumstances that can result in a loss of desired tax benefits. To continue learning about a general overview of the self-rental provision and the passive activity requirements and how to maximize your deductions from them, keep reading. You will also learn the effects of selling an operating company with a self-rental property still on the books.

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Just Good Business – Review Your Office Security

Office security. It’s for you and your small business clients. Sometimes small business clients who have relatively low-tech operations don’t think they need to think much about office security. That’s just not true. Almost every small business has some level of liability exposure for theft of client information or their own information (banking, credit cards, account passwords, etc.)—even businesses that don’t consider themselves “web based” or “high tech” may have client or company proprietary information they want to keep secure and private. Often business owners focus on cyber security (and with good reason). But a good, comprehensive security plan creates a safety triangle around important information and the property that holds it. The three sides of this triangle are cyber security, physical security, and (at the base of it all) operations security. Keep reading to secure your future!

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