At Around the Tax World, you can find out all about what’s going on in the wonderful, worldwide world of tax. Every month, we’ll feature a few mini-articles on what’s been going on in the world when it comes to tax, and fully available for viewing even if you don’t have a subscription.
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In The Headlines
The S&P 500 stalls as the war in Iran continues and the Federal Reserve meets on interest rates. Last week, the widely-used stock market index remained unchanged as oil prices jumped up to nearly $120 per barrel. A 5% price increase came on the heels of President Trump’s announcement that the U.S. blockade of Iranian ports would be extended. The Nasdaq Composite also remained flat, while the Dow Jones Industrial Average fell by 0.6%.
Meanwhile, investors also kept an eye on a recent meeting of the Federal Reserve. The central bank did not make changes to its benchmark interest rate, despite pressure from President Trump. Notably, the policy meeting was expected to be Jerome Powell’s last, since his term as Federal Reserve chair ends on May 15th. Trump has nominated Kevin Warsh to replace Powell, but a new chair may not be enough to secure interest rate cuts as the president hopes. Warsh will not be the only one with a vote on the decision, and given rising inflation and the ongoing conflict in Iran, the 11 other Federal Reserve policymakers may remain hesitant to approve cuts.
A tale of broken promises: Elon Musk testifies in the OpenAI trial. The highly-publicized trial between Elon Musk and the maker of ChatGPT has begun. Musk recently took the stand and articulated his claim that OpenAI went back on its promise to function as a nonprofit. The billionaire plaintiff co-founded OpenAI alongside its current CEO Sam Altman and several others in 2015. Musk left the board of directors in 2018 after a failed attempt to acquire OpenAI via Tesla, his automotive company. Shortly after, OpenAI launched a for-profit branch. The lawsuit originally sought $134 billion in personal damages, but Musk has now pivoted to donating any money from the case to the OpenAI charity. In his testimony, Musk claimed that he founded OpenAI as a counterweight to Google. Musk felt the popular search engine provider was not taking AI safety seriously, which sparked the idea of creating a nonprofit, open source alternative. OpenAI has stated that these claims are baseless and filed a motion to dismiss the case.
The World Cup seeks a U.S. tax exemption as the summer matches draw near. FIFA, the international soccer association, is closing in on a tax benefit for all 48 teams that qualified for the tournament. After last-minute negotiations with the U.S. treasury, FIFA will likely be successful in securing a federal tax exemption on any World Cup earnings, though associations may still have to pay state and city-level taxes. FIFA members will still have to apply for this benefit themselves, but they have been reassured that World Cup participants will be approved as long as the organization does not benefit individual private shareholders or take part in any political activity. Canada and Mexico will also be hosting World Cup matches this summer, and both countries have already approved tax exemptions for all national associations. The first U.S. matches are scheduled for June 11th and will continue through the final on July 19th.
What's New In The Tax World?
Republican lawmakers look to woo voters with lower capital gains taxes
With midterm elections scheduled for this November, Republicans and Democrats will be battling for a third of the Senate seats and all of the House seats. In an attempt to win over voters, Republicans have put forward a new proposal to change how capital gains are taxed. The new rule would index capital gains for inflation. This would work by allowing taxpayers to adjust the value of an asset according to overall price increases. If inflation goes up, taxpayers would be able to increase the base value of their assets so that when they sell it, they see less profit (or gain) from a tax perspective.
The proposal came up in a recent discussion between Senator Ted Cruz and Treasury Secretary Scott Bessent. A question on the table is whether the Treasury department could make that change itself or if congressional approval is needed. A court challenge is considered likely if the Treasury attempts to move forward without an official bill. Supporters of the idea have stated that indexing capital gains would encourage homeowners to sell while inflation is high, which could help resolve the U.S. housing shortage. The shift may also result in more investors selling stocks and bonds. Opponents of the idea say that the change would primarily benefit the wealthy.
The capital gains proposal faces significant obstacles to becoming a reality this year. Another big tax and spending bill would require near unanimous support among Republicans, but this will be especially hard to secure during election season. Those with seats up for election will have to weigh whether their constituents will favor the idea. Other Republican lawmakers have argued that a major bill is needed to demonstrate that the GOP is addressing current economic problems.
Meanwhile, Democrats are rolling out their own platform focused on lowering the cost of living by increasing taxes on the wealthy. The “New Affordability Agenda” is a collection of 10 new bills that would address issues like housing affordability, child care costs, corporate control over patents, and standards for overtime pay.
State-By-State Updates
California’s “billionaire tax” makes it a step closer to the November ballot. The proposal would levy a one-time 5% tax on the assets of residents whose net worth exceeds $1.1 billion. The tax would be retroactively applied to anyone living in the state from January 1st, 2026 onward. To appear on the ballot this fall, supporters needed to collect at least 875,000 signatures. Members of Service Employees International Union-United Healthcare Workers West is the union that drafted the proposal. At the end of April, the union submitted over 1.5 million signatures for their petition. If the necessary signatures are deemed valid, voters will have to decide whether to approve this tax come November. As it stands, any revenue from the billionaire tax would go toward healthcare. California has struggled in the aftermath of Medicaid cuts, resulting in reduced hospital services, closed clinics, and the loss of healthcare coverage for families across the state.
Missouri voters will decide between income taxes or sales taxes. The “Show Me” State’s November ballot will officially include a proposed amendment that eliminates individual income tax. This marks the first time since the introduction of modern income tax in 1913 that a U.S. state legislature has posed this question to voters. A “yes” to eliminating state income tax will also be a “yes” to increasing sales taxes in Missouri. Under the proposed constitutional amendment, state legislators would be allowed to impose a sales tax on “any goods and services.” This would allow the state to gradually reduce the income tax based on revenue growth. Governor Mike Kehoe has spoken in favor of repealing the individual income tax, predicting that it will attract new businesses and residents. Opponents are concerned that the average household will actually pay more in taxes if Missouri begins to rely on sales taxes. An estimate by the Institute on Taxation and Economic Policy suggests that a household earning between $49,000 and $78,000 a year would pay about $535 more in taxes if Missouri’s income tax is replaced with sales taxes.
New York City’s mayor and the New York governor go head-to-head over the pass-through entity tax. A new proposal from Mayor Zohran Mamdani would reduce an optional tax that benefits the owners of partnerships or S corporations. The pass-through entity tax (PTET) became popular in the aftermath of the COVID-19 pandemic as a way to offset high state and local taxes (SALT). Instead of paying SALT as an individual, PTET allows business owners to pay these taxes through their business. Individuals face a cap on how much SALT they can deduct on their tax return, but businesses do not face the same limitations for PTET. Mamdani argues that PTET is essentially a tax break for the rich. As New York City looks for a way to increase its tax revenue and close its $1 billion budget gap, this change has been put forward as a solution. However, New York Governor Kathy Hochul pushed back on the idea. Hochul points to over $4 billion in state aid that has been funneled toward the city and argues that Mamdani needs to reduce spending first.
Are Wisconsin’s tax breaks for data centers earning money or costing money? State leaders are split on how a sales and use tax exemption for data center projects is impacting the state. Some assert that the four projects by Epic Systems, Meta, Microsoft, and Oracle are contributing to economic growth—and that this is only the beginning. Others are advocating for more regulation and are concerned about the estimated $2 billion in tax revenue that Wisconsin has lost by providing this tax exemption. Data center builders are not required to pay tax on most purchases related to construction and operations as long as they meet certain investment thresholds. One concern is that Wisconsin law currently lacks a set of uniform regulations on how the books for these data centers must be kept. Several proposed laws were drafted within the last year, but none reached the governor’s desk. A proposal by state Democrats would have introduced prevailing wage and renewable energy requirements for data centers. A proposal from Republicans would have required renewables used to power the data centers to be on-site.
Tax Planning Tips
Who can benefit most from the IRS’ free tax withholding tool? If your tax bill has been higher than expected, especially for multiple years in a row, it may be time to adjust your paycheck withholdings. Typically, this means filling out Form W-4 and submitting it to your employer. However, the IRS also offers a free online tax withholding estimator to help taxpayers more accurately calculate their next tax bill. How does the tool work? Input basic information about yourself and your spouse, your earnings, and any adjustments, deductions, or credits. The tool then generates a pre-filled W-4 for you to use.
The tool does face some limitations, however. Experts say that those with simple W-2 wages are the most likely to benefit from the estimator. Those with multiple sources of income, bonuses, rental income, side businesses, stock-based compensation, or other complex tax situations may not find the tool sufficient for their needs. Overpayments on taxes became more common after the enactment of President Trump’s “One Big Beautiful Bill” Act. Despite a number of tax cuts and tax bracket changes, the IRS did not update withholding tables for employers in time for the last tax season.
A new cryptocurrency tax form accelerates the importance of understanding crypto tax rules. In 2025, the IRS introduced Form 1099-DA for “Digital Asset Proceeds From Broker Transactions.” Starting with the recent tax season, this new form is now required for brokers to report sales, exchanges, or disposals of everything from cryptocurrency to NFTs. However, a recent report from CoinTracker and Coinbase estimates that about 61% of investors were unaware of the new reporting rules.
How can you prepare for the next tax season if you deal with virtual currency? First, remember that every trade or payment involving cryptocurrency can trigger a taxable event. The CoinTracker and Coinbase report found that less than half of cryptocurrency investors can name what triggers a tax event, and only a third know how to adjust their cost basis. Because Form 1099-DA only became available in 2025, investors had to manually calculate their cost basis and use that to report on gains or losses. To prepare for next April, make it a practice to collect documentation for any transactions involving any digital assets. Given these changes, working with a tax planner will be especially beneficial for investors in virtual currencies.
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CURRENT EDITION
Tax Loss Harvesting with Cryptocurrency
In the Fall of 2025, Bitcoin reached an all-time high of over $120,000. Since then, it fell over 40% to under $70,000 in the first quarter of 2026, before slightly recovering, currently resting around $75,000 as of this writing. With the steep drop in the price of Bitcoin and other cryptocurrencies, a common question from taxpayers is whether they can use the current losses to offset their other income. Large investors and professionals such as Grant Cardone and Shehan Chandrasekera (Head of Tax Strategy at Cointracker) have suggested that cryptocurrency can be sold and bought back immediately to claim the tax benefits. As with most things, the answer to this is not as simple as they portray, and many commentators, influencers, and sometimes professionals, miss the intricacies of cryptocurrency taxation.
The Kwong Tsunami: Why Form 843 Claims Could Soon Flood Your Practice
The buzz around the Kwong v. United States decision is quickly turning into something very real for practitioners: potentially a wave of Form 843 claims tied to COVID-era penalties and interest. With voices like Frank Agostino pushing for action, the message is clear: dig into client transcripts and don’t sit this one out, even though the outcome is still being litigated.
The Strategic Tax Analysis Process: Your Systematic Approach
Early in my career as a tax professional, I thought identifying strategic opportunities was primarily a function of technical knowledge. If I just knew enough tax law, I assumed the right strategies would naturally reveal themselves when reviewing a client’s situation. This assumption led to a haphazard approach where I might spot a planning opportunity for one client but completely miss an identical opportunity for another simply because I wasn’t methodically looking for it. This inconsistent approach changed when, leaning on my training as an instrument rated pilot, it occurred to me that I should be following a structured process that assures that I won’t miss any opportunities. That observation transformed my practice. I realized that identifying strategic opportunities isn’t just about what you know—it’s about how systematically you apply that knowledge. Even the most knowledgeable tax professional will miss opportunities without a structured methodology for uncovering them. In this article, I’ll share the systematic strategic analysis process I’ve developed over three decades of tax practice. This methodology doesn’t replace technical knowledge—it magnifies its impact by ensuring you consistently identify opportunities across diverse client situations.
