2019 is here, and it’s almost time to file your first tax return under the new law. Washington sold the Tax Cuts and Jobs Act as “tax simplification.” And really, who can’t raise a toast to that? Lower rates! Higher standard deductions! A 1040 you can fill out on a postcard! But many taxpayers, especially those in high-tax states like New York and California, can be forgiven if they feel like they woke up with a massive hangover. Deductions for state and local income and property taxes are now capped at $10,000, regardless of income. And employee business deductions are nixed entirely. That’s going to be pricey for the Very Large Men we mentioned in the title.Continue reading →
Last week, a California lawsuit involving Monsanto Corporation’s flagship product, Roundup weed killer, reveals how the new math of last year’s tax law changes the rules. A San Francisco-area school groundskeeper named Dewayne Johnson, who sprayed up to 150 gallons of the pesticide at a time, sued Monsanto, claiming it gave him cancer. The jury agreed and awarded him $289 million, including $39 million in compensatory damages and $250 million in punitive damages.
Unfortunately for Johnson, he’s not going to get to keep anywhere near that whole $289 million. He’s going to run into some new math and wonder if maybe 2+2 doesn’t somehow equal just one.Continue reading →
Baseball is back, even as some teams are looking at early-season snow days. Little-leaguers across the land are donning gloves and getting ready to watch their favorite big-leaguers take to the field. Stats geeks are prepping spreadsheets to crunch numbers like WAR (Wins Above Replacement), BABIP (Batting Average on Balls in Play), and LWCT (Largest Wad of Chewing Tobacco). And the umpires at the IRS are watching a new pitch that Washington just threw across their plate, too.
Since 1921, code section 1031 has let you exchange property you’ve held for business or investment without paying tax on your gains. These “like-kind” exchanges usually involve real estate. They also include vehicles and equipment — if an up-and-coming CEO wants to swap his company’s tired old Gulfstream IV for a newer, shinier model V, that’s cool, too. The IRS has even ruled that “trades of player contracts owned by major league baseball clubs will be considered exchanges of like-kind property.”
But last year’s Tax Cuts and Jobs Act trimmed the roster on like-kind exchanges to real estate only. And that means some teams may already be behind in the count for taxes they owe on their trades!Continue reading →
On December 22, the President signed the Tax Cuts and Jobs Act into law in just 50 days from start to finish. That’s less time than it usually takes to rename a post office after a local school board member. Now those lawmakers may be rediscovering something their grandmothers told them back when they were little: namely, “marry in haste, repent in leisure.” It turns out Congress may have skipped ahead to the bottom of their homework a little too quick, and made a teensy-weensy boo-boo or two along the way.Continue reading →
Our Internal Revenue Code similarly focuses most of its attention on core questions like brackets, rates, standard deductions, and personal credits. But the tax code’s 70,000 pages include their fair share of lesserprovisions, too. And the Tax Cuts and Jobs Act that just passed includes a couple that might sound like the tax equivalent of sneaking a smelly camel’s blanket in under a port inspector’s nose.
Here’s one that just seems petty and mean. Under the old law, you could exclude a whopping $20 per month of income for expenses related to riding your bike to work, so long as you weren’t getting other pretax transit benefits. That’s not a whole lot of benefit for bike commuters. Granted, most bikes aren’t that expensive — but cyclists face far bigger dangers than taxes, in the form of road-hogging trucks and SUVs who can run them over without even seeing them.Continue reading →
What will Apple do with their iSavings from the Tax Cuts and Jobs Act? Throw a party, of course! They’ve announced plans to hire 20,000 new employees, build another major domestic campus, and boost R&D.
They’ll also use billions more for dividends (which put cash in shareholders’ hands) and share buybacks (which also rewards them by pushing prices up).
We realize you don’t have $252 billion to plan for. But that doesn’t mean you can’t profit from planning, too. So give us a call when you’re ready to take full advantage of the new tax law and see how much iCash we can put in your pocket!Continue reading →