On March 1, the Commission on the State of U.S. Olympics & Paralympics issued a report: Passing the Torch - Modernizing Olympic, Paralympic, & Grassroots Sports in America. Per the announcement, this commission was directed by Congress to study recent reforms of the U.S. Olympic and Paralympic Committee to improve the organization's "ability to fulfill its mission." The word "tax" appears 39 times in the report. Tax law changes suggested: Page 17 - allow taxpayers to deduct the costs for their children to participate in youth sports. Page 18 - allow taxpayers serving as volunteer coac ..read more

One of several features that make tax systems complicated are the numerous exceptions that pull out from taxation something that is part of the tax base for a particular type of tax. It is probably almost impossible to find any federal, state or local tax that doesn't have some type of exception. A list of sales tax exemptions produced by the California Department of Tax and Fee Administration (CDTFA) lists 171 sales tax exemptions. All of them need a definition in the statute and often an explanation from the tax agency. This creates a lot of complexity because it is difficult to define most ..read more

Over the years, I have heard individuals and tax professionals raise various questions on the operation of the American Opportunity Tax Credit (AOTC at IRC 25A). This is the credit that for the past many years provides up to a $2,500 credit for each of the first four years of higher education at a college or university.  It started in the early 1990s as the Hope Scholarship credit for a lower amount and only the first two years of college. There are numerous other tax breaks for higher education including an exclusion for scholarships, a limited above-the-line deduction for student loan i ..read more

The proposed regulations on broker reporting of digital assets released August 29, 2023 (REG-122793-19) included more than guidance under IRC section 6045. They also included related proposed regulations under section 1001 on amount realized and section 1012 on basis. I think that generally, the 1001 and 1012 proposed regulations are fairly straightforward and tie to the general rules at these provisions.   One clarification they offer is that in a transaction where a taxpayer exchanges, for example, X coin for Y coin and pays a transaction fee, 50% of the transaction fee is treate ..read more

The Earned Income Tax Credit (EITC) was added to the law in 1975 (Tax Reduction Act of 1975 (P.L. 94-12, SEC. 204; 3/29/75). So, the first note I'd like to make is that March 29, 2025 will be the 50th anniversary of the EITC. The Congressional Research Service has a nice report on the history of the EITC (4/28/22 version). There is a federal annual EITC Awareness Day, which was January 26, 2024 (IR-2024-22). Employers have federal (and perhaps state) obligations to tell employees about the EITC. Law changes in California in 2023 require employers to notify employees of the EITC (and a few oth ..read more

On December 21, 2023, the Joint Committee on Taxation released its Bluebook for Tax Legislation Enacted in the 117th Congress (we are currently half way through the 118th Congress). These reports provide helpful background and explanation for tax changes. Pulling from the table of contents for 8 pieces of legislation that had tax changes (with most in the Inflation Reduction Act of 2022 and the SECURE Act 2.0), I count the following 172 changes.  How can anyone keep up with all of this? I spend a lot of time on tax updates - tracking them, making update presentations (and it is challengin ..read more

IRC Section 280A was enacted in 1976 (P.L. 94-455). This provision deals with office in the home and rental of a residence. It has a few provisions that either are no longer needed (rental of a residence can be governed by the passive activity loss limitation added in 1986) or clarified (the home office rules are not easy to get through). And ... subsection (g) should be repealed as inequitable and unnecessary. Section 280A(g) provides that if a "dwelling unit" is used as a residence and rented for less than 15 days during the year, the rental revenue is tax-free!  There is no logic to t ..read more

The federal gasoline excise tax that helps fund road construction and maintenance has been 18 cents per gallon since 1993! The tax is not tied to the price of gasoline or adjusted for inflation. It requires an act of Congress to increase the tax. For many years there have been federal and state government studies and ones by think tanks and academics on alternatives to the gasoline excise tax to fund roads, mainly driven by the fact that we drive more fuel efficient cars each year and today many cars run on electricity not gasoline. Since 2008, Congress periodically transfers money from the g ..read more

Today I received information from the National Academies on their new report, Reducing Intergenerational Poverty, Sept 2023. It defines "intergenerational poverty," provides demographics of this poverty, describes education and health issues associated with continual poverty, and makes recommendations.  The introduction reminds us of the relevance of this topic to us all (page 1): "Capable and responsible adults are the foundation of any well-functioning and prosperous society. Yet low-income families struggle to offer their children the same advantages and necessities that better-off fa ..read more

In case it is of interest to you, something I started doing in 2007 (same year I started this blog) was maintaining a website of tax reform hearings of the 110th Congress and have done so through today finally getting a webpage for the 118th Congress (which started in January 2023) posted today. I use the term "tax reform" broadly here as just about any tax hearing, even the typical April ones to debrief about the filing season can lead to reforms. The website for the 118th Congress with links back to 110th is here - https://www.sjsu.edu/people/annette.nellen/website/118th-hearings.htm U ..read more