As we near the end of the 2023 tax year, it’s crucial to reflect on the significant federal tax developments that have shaped this year. Let’s explore some key points in the ever-changing landscape of tax regulations and policies that are essential for review before year-end.
Employee Retention Tax Credit (ERTC) Scrutiny:
The ERTC, a vital component of the CARES Act, has provided crucial support to businesses during the challenging times of the COVID-19 pandemic. However, the IRS is closely monitoring fraudulent claims. It’s crucial to adhere to the rigorous guidelines for this refundable tax credit.
Changes in Research & Experimentation Expenses:
The Tax Cuts and Jobs Act (TCJA) brought significant modifications to the deduction rules for research and experimentation costs under IRC section 174. A thorough review is necessary to understand how these changes impact businesses, especially in the tech and scientific sectors.
Estate and Gift Tax Adjustments:
The year 2023 witnessed a notable increase in federal gift/estate tax and generation-skipping tax exemptions due to inflation. Strategic decision-making considering these adjustments is essential.
Charitable Contributions:
Focus on Compliance: Recent judicial decisions and IRS guidance have emphasized adhering to substantiation rules when claiming charitable contribution deductions. Ensuring compliance is crucial to safeguard deductions.
Cryptocurrency Taxation:
In the rapidly evolving world of cryptocurrencies, updates on their taxation include specific guidance on staking and the applicability of qualified appraisal rules for crypto contributions.
Partnerships and Profit Interests:
A significant Tax Court case this year has impacted the profits interest rule within partnerships. Understanding upcoming IRS reporting requirements is crucial for partnership structures.
New Electronic Filing Mandates:
The Taxpayer First Act of 2019 introduces new electronic filing requirements, including changes to thresholds and rules that affect a wide range of tax forms.
Retirement Plans and SECURE Act Implications:
The SECURE Act’s catch-up contributions and rules for inherited IRAs will have an impact on retirement accounts.
Corporate Transparency Act (CTA) Compliance:
Starting from January 1, 2024, the CTA mandates reporting of beneficial ownership. A comprehensive review is essential to understand these requirements and ensure compliance for reporting companies and their direct and indirect owners.
Hobby Loss Rules in Focus:
Various case studies and guidelines have impacted the limitations on deductions for activities not pursued for profit, commonly referred to as “hobby loss” rules.
Miscellaneous Topics:
From NFTs to PPP Loans: The IRS has issued regulations regarding monetized installment sales, the tax treatment of non-fungible tokens (NFTs), improperly forgiven Paycheck Protection Program loans, and cancellation of debt income.
This is not an exhaustive review of tax issues and news for 2023. For businesses and individuals navigating the complexities of tax regulations, staying informed and compliant in this dynamic environment is crucial. Stay updated to optimize your tax planning and minimize risks.