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Municipal bonds, which are also known as muni bonds or simply munis, are commonly issued by state and local governments. Interest paid on munis is generally tax exempt which benefits investors in high tax brackets. Individuals should only own munis in a taxable account so they can capture the tax-exempt benefit. They have very low default/credit risk due to either a high credit rating and/or a third-party guarantee. Capital gains associated with these bonds are taxable unless the de minimis rule applies. Tax-exempt interest payments may also trigger the alternative minimum tax (AMT). Investors can purchase munis directly, or indirectly through a fund. [ABSTRACT FROM AUTHOR]

Two pending U.S. Supreme Court cases, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. U.S. Dept. of Commerce, are challenging the level of deference given to agency rulemaking. The cases involve the National Marine Fisheries Service (NMFS) interpreting a federal law to require fishing companies to pay the salaries of federal monitors on fishing vessels. The fishing companies argue that the law does not specifically authorize this fee and that Chevron deference, which grants deference to agency interpretations of ambiguous statutes, is an unconstitutional limit on judicial oversight. The Court heard oral arguments in January 2024 and a decision is expected in June 2024. The outcome could have implications for the IRS and its reliance on Chevron deference in defending Treasury regulations. [Extracted from the article]

The corporate alternative minimum tax, enacted as part of the 2022 Inflation Reduction Act, intends to impose a minimum level of taxation on profitable large corporations using financial statement income as a tax base. Although both alternative tax bases and the usage of financial statement income in taxes have a long history in the United States, the tax represents a substantial change in the current corporate tax law. Although the corporate alternative minimum tax is predicted to raise billions of dollars from a small subset of the largest corporations, its design raises concerns about long-term efficacy. In this article, we summarize the development of the corporate alternative minimum tax in light of its historical predecessors and compare its design against accepted standards of good tax policy, ultimately identifying multiple inadequacies in its construction and implementation. We conclude by making policy recommendations. JEL Classifications: H21; H25; K34. [ABSTRACT FROM AUTHOR]

Two tax regulations that permit U.S. multinational enterprises (MNEs) to use foreign contract manufacturers and to disregard their wholly owned foreign subsidiaries have created significant tax incentives for MNEs to move manufacturing outside the United States. These tax incentives have contributed to the loss of five million manufacturing jobs and the closure of more than 91,000 plants since 1997. The job losses exacerbated racial and economic inequality and stressed our political system. But the losses arising from offshore manufacturing extend to other areas as well. Offshore manufacturing increases U.S. exposure to supply chain disruptions, threatens national security, and decreases research and development efforts to improve production techniques. Also, as automated manufacturing increases, the use of offshore manufacturing hinders the ability of the U.S. to compete in that sector. The U.S. implementation of a corporate alternative minimum tax in 2023 and the current Organization for Economic Co-operation (OECD) initiative, Pillar Two, which seeks to impose a global corporate minimum tax, may reduce the incentive to offshore in some instances. But the incentives created by the two tax regulations for U.S. MNEs to offshore clearly remain and should be eliminated given the harms they have inflicted and are likely to inflict in the future. This Article proposes two amendments to the regulations to further reduce the tax incentives for offshoring. First, MNEs should not be allowed to use foreign contract manufacturers to qualify for the manufacturing exception in Subpart F of the Internal Revenue Code. Second, MNEs should not be permitted to disregard their wholly owned foreign entities. Under the Chevron doctrine, both proposals would clearly be valid. The Supreme Court's nascent major question doctrine (MQD), however, creates significant uncertainty about the circumstances in which Chevron deference should apply. This Article concludes that even if the MQD applies to eliminate Chevron deference, the so-called "weak form" of the MQD should validate the proposed regulations. [ABSTRACT FROM AUTHOR]

Given the Republican-controlled House and narrow Democratic majority in the Senate, the Biden Administration has found itself in the perilous situation of needing to raise tax revenue while retaining the support of moderate Democrats. President Biden has proposed raising revenue by bringing the United States closer to a worldwide no deferral system and raising the corporate tax rate from 21 percent to 28 percent. These changes are unlikely to become law. Together, they simply do not have the support of moderate Democrats, Republicans, and, especially, Corporate America. This Article aims to resolve the Biden Administration’s conundrum by proposing a worldwide no deferral system with a corporate tax rate in the mid to high teens. In fact, such a proposal has already, in some sense, been made by both the Biden Administration and Congress and recently enacted into law: the 15 percent corporate alternative minimum tax. But few recognize this new tax system as a worldwide no deferral system because it is imposed on financial accounting income and applies only to the largest corporations. This Article addresses a gap in existing proposals for U.S. international tax reform by discussing Corporate America’s focus on the interaction between financial accounting and tax accounting. Additionally, it proposes a U.S. international tax system that could have the support of tax scholars, policymakers, and Corporate America, all without sacrificing revenue. [ABSTRACT FROM AUTHOR]

Copyright of FinanzRundschau is the property of De Gruyter and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The COVID-19 pandemic has revealed grave structural faults in our global institutional architecture. We argue that political energies should now be focused on three main areas where transformative reorganizations are realistically achievable. In global health, we propose that monopoly patents be complemented by health impact rewards as an optional alternative incentive for developing and supplying innovative pharmaceuticals. To slow global warming, we propose a common glide path for reducing per-capita emissions, with the option to compensate for temporary excess emissions by financing the achievement of additional emission reductions in poorer countries. For the global financial sector, we propose eliminating fossil-fuel subsidies, reintroducing Glass–Stegall, protecting the fair value of international natural-resource sales, and instituting an alternative minimum tax on corporations, financial transactions taxes and progressive taxes on internationally operating digital businesses. [ABSTRACT FROM AUTHOR]

The Article discusses the structural dynamics that will underlie the international negotiations prompted by a U.S. proposal about a minimum global tax. Part I outlines the main features of this proposal, while Part II describes in more in detail how home countries can upgrade their strategies against profit-shifting and tax competition through a "country-by-country minimum tax" under a comprehensive agreement pursued at the OECD/G20 level. The Article then discusses at Part III discusses how we are heading toward an "international tax regime," a concept drawn from international relations and now brought to bear in international taxation, presenting a grammar of tax concepts about multilateralism and cooperation together with a description of how rational choice theory can be applied to collective action problems. Part IV discusses in more in detail the functioning of the minimum tax regime proposed by the United States, while Part V discusses how this approach can be advanced by the United States acting as initiator through minilateralism, the variant of multilateralism which requires the inclusion in a compact of the smallest possible number of countries needed to have the largest possible impact on solving a pervasive tax problem. Part VI draws some preliminary conclusions about the country-by-country minimum tax regime at the OECD level. The Article concludes at Part VII by canvassing a potential paradigm shift in international taxation toward cooperative minilateralism as we move in the direction of a global minimum tax. [ABSTRACT FROM AUTHOR]

In this paper, I examine the role of a wealth tax in the context of the UK's existing taxes on wealth. First, I discuss several ways in which the UK could be said to tax wealth already, and I set out two possible directions for reforming these taxes, highlighting policies that are merited under either approach. Second, I consider whether and under what circumstances a broad‐based tax on the ownership of wealth – a 'wealth tax' – could be justified instead of or in addition to these reforms. Third, I address how a wealth tax should interact with other taxes, focusing on concerns regarding 'double taxation' and (conversely) proposals for an alternative minimum tax based on wealth. I conclude that there is a large degree of consensus amongst existing proposals to reform our current taxes on wealth, and that most of these reforms would be required whether or not a wealth tax is introduced as well. [ABSTRACT FROM AUTHOR]

The number of children diagnosed with autism, Asperger's syndrome, and other intellectual disorders continues to skyrocket. A previous column [Brinker, Journal of Financial Service Professionals 65, No. 5 (2011): 16-18] highlighted that parents with special needs children are often unaware of the substantial tax benefits available to them and often forgo hundreds, if not thousands, of dollars of potential tax deductions. Although the focus in the 2011 column was on the expanded definition of medical care as a deduction for families, another reality inevitably surfaces: finding the wherewithal to finance these expenditures. Parents of special needs children quickly discover that medical care expenditures for a special needs child can prove astronomical. As a result, parents and their financial advisors need to become familiar with some unusual IRC provisions that may assist and/or hinder their process. This article focuses on two common resources often utilized in financing medical care: home equity loans and retirement plan and individual retirement account distributions. This article will also illustrate the impact of the alternative minimum tax in planning for the financing of such unreimbursed medical expenses. [ABSTRACT FROM AUTHOR]

The purpose of this article is to provide advisors with methods of increasing the impact of executive compensation through effective charitable giving strategies. To build a foundation for the proposed strategies, this article will examine the historical significance of both executive compensation and charitable giving, as well as the implications of both lifetime transfers and bequests of stock options. Recognizing the growing prevalence of donor-advised funds in recent years, the article will conclude with a discussion of how advisors can develop holistic charitable giving strategies by leveraging stock options and charitable remainder trusts in conjunction with donor-advised funds. [ABSTRACT FROM AUTHOR]

The provisions of the alternative minimum tax (AMT) can result in a "curse" beyond the additional tax caused by the AMT itself. Taxpayers subject to the AMT will find that claiming their dependent children does not lower their overall tax liabilities. Furthermore, most taxpayers subject to AMT will likely have modified adjusted gross income (MAGI) beyond the limit permitted to claim education expense credits for their dependent children. This is the AMT curse--no tax savings from claiming a dependent child and no tax benefit for education expenses because of excess MAGI. In this article a real-life case is used to apply the provisions of Reg. §1.25A-1(f)(1) to partially mitigate the AMT curse. This regulation allows the AMT taxpayer-parent to waive claiming the student-child as a dependent, which then permits the "dependent" child to claim a qualifying education expense credit (assuming the student-child has sufficient tax liability) even though the student-child is prohibited from claiming a personal exemption. This results in a tax saving to the dependent child that otherwise would be lost, but does not increase the overall tax liability of the AMT taxpayer-parent who waives the dependency exemption. [ABSTRACT FROM AUTHOR]

Copyright of Revista Técnica Tributaria is the property of Asociacion Espanola de Asesores Fiscales and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Crónica Tributaria is the property of Instituto de Estudios Fiscales, Ministerio de Hacienda y Funcion Publica and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The article discusses on October 23, 2018, Anil Bokil, the founder of Arthakranti, a Pune-based non-government finance think-tank, India, read the press release issued by the Department of Revenue. Topics include five hydrocarbons crude oil, petrol, diesel, natural gas, and jet fuel, have temporarily kept out of GST; and the economic reality of India has crippled on account of the complex taxation system.

The Supreme Court's recent decision in United States v. Windsor, which has overturned the federal treatment of same-sex couples as single in states which recognize such marriages, affects a number of tax and financial planning topics. While it may seem that the issue has been put to rest by the Supreme Court, this is only the beginning for planners. This article addresses those items most likely to affect the clients of financial professionals. [ABSTRACT FROM AUTHOR]

The Alternative Minimum Tax (AMT) was originally designed to combat aggressive tax planning used to eliminate or substantially eliminate the taxable income of high-income taxpayers. In 2012 the number of taxpayers subject to the AMT is expected to explode by 661%, from 4.1 million in 2010 to 31.2 million. The AMT is no longer a tax imposed only on high income individuals; it has descended to the ranks of middle-income taxpayers. This article, the first in a two-part series, reviews the history of the AMT, shows how the AMT impacts middle-income taxpayers, and suggests policy changes for lawmakers. A second article will review possible planning options for advisors to help their clients avoid the AMT. [ABSTRACT FROM AUTHOR]

Although the Tax Cuts and Jobs Act (TCJA) 2017 contains many favorable business tax provisions such as a flat 21 percent tax rate for C corporations as well as the elimination of the corporate alternative minimum tax (AMT); it also creates new unfavorable limitations on business expense deductibility. For example, the TCJA (2017) amends the Internal Revenue Code (IRC) section 163(j) to reduce the deductibility for net business interest expense. Due the complexity of section 163(j), both the Treasury and the Internal Revenue Services (IRS) have issued numerous regulations detailing the application of section 163(j) as amended by the TCJA (2017). C corporations, S Corporations and partnerships implement the provisions of section 163(j) in different ways. This paper summarizes these varying implementations including the use of a real-life case. The application of section 179 (immediate expense), section 274 (food and beverage for employees) as well as section 163(j) (interest expense) are also examined. Finally, this paper updates readers with the newest guidance from the IRS on the Coronavirus Aid, Relief, and Economic Security Act (2020) in relation to section 163(j). [ABSTRACT FROM AUTHOR]

The Small Business and Work Opportunity Tax Act of 2007 provides a number of incentives for small businesses along with provisions to raise revenues for the government. This article provides a summary of these provisions. Key areas discussed include enhanced credits and deductions, S corporation changes, and changes to the "kiddie tax" as well as other penalty and interest issues. [ABSTRACT FROM AUTHOR]

This article comments on the paper "Potential Errors in Detection of Earnings Management: Reexamining Studies Investigating the AMT of 1986," by W. W. Choi, J. D. Gramlich and J. K. Thomas. The authors claim to identify deficiencies in the logic underlying the prior studies and the methodologies used in those studies. The authors assert that prior studies did not consider all of the implications of a contemporaneous tax rate decline, which creates incentives for firms to shift to taxable income in the opposite direction, from 1986 to 1987.

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This article presents a critique of the work of Myron Scholes, G. Peter Wilson and Mark Wolfson regarding firm behavior towards the 1986 tax laws. They intended to discover if, and how, firms managed their 1986 and 1987 earnings to reduce their tax liabilities. The change in tax rates created an incentive to shift income to 1986 from 1987 to avoid the 20% tax rate on alternative minimum taxable income (AMT). The author raises questions over their use of the time-series model, the veracity of their data, and some elements of their methodology.

This article presents a critique of the work of Charles Boynton, Paul Dobbins and George Plesko regarding the effect of the alternative minimum tax (AMT) on firms' earnings management. Although their research data supported the hypothesis that firms used accounting methods to reduce income in 1987 to avoid exposure to the AMT, the author raises pertinent questions regarding their methodology. Such issues revolved around the use of discretionary accrual proxy and the use of tax return data. These concerns contribute to an overall skepticism towards the conclusions of Boynton et al.

This article discusses the impact of the U.S. corporate alternative minimum tax (AMT) on firms' accounting behavior, specifically if they managed their 1986 and 1987 earnings to reduce their tax liabilities. Companies had an incenctive to report income from 1986 to 1987 to avoid the 20% tax rate on alternative minimum taxable income (AMTF). The authors found that many firms also employed foreign tax credits and net operating loss carryovers to avoid the tax. They also revealed a relationship between firm size and earning management.

This study examines the influence of taxation on the wife's choice between home and market production by treating the marginal tax rate as a decision variable. The data analyzed, from the Panel Study of Income Dynamics, provide information on the annual hours that husbands and wives devote to market work and housework, including child care, whereas previous studies have measured only changes in market hours and have assumed, in effect, that all other hours were devoted to nonproductive leisure. The empirical results indicate that wives working outside the home react to higher levels of taxation by reducing their market hours and increasing their home production time. In fact, the hypothesis cannot be rejected that wives completely reallocate time lost from the labor market to nonmarket production in an attempt to restore household real income. The authors conclude that the production loss from progressive taxation is usually overstated, though wives may lose through depreciation of their market skills and society loses to the extent that specialization in the economy declines. [ABSTRACT FROM AUTHOR]

Groups representing some of the US's largest companies are putting pressure on lawmakers to alter Biden's corporate alternative minimum tax. [ABSTRACT FROM AUTHOR]

Practitioners are working on a wide variety of COVID-19 issues, both tax and non-tax related, and striving to provide the best service to clients in these difficult times. Many tax practitioners are engaging in dialogue with Treasury and the IRS, and the Tax Section has provided comments to the government regarding the tax implementation of the CARES Act. If you are interested in doing pro bono work (tax or otherwise), talk to your law firm's pro bono coordinator, contact your local low-income taxpayer clinic, or reach out to me or someone on the ABA Section of Taxation's Pro Bono & Tax Clinics Committee. [Extracted from the article]

The article focuses on the passage of Tax Cuts and Jobs Act which amended various provisions of the Internal Revenue Code of 1986. Topics discussed include significant increase in the percentage of taxpayers who use the standard deduction, alternative minimum tax (AMT) regime is retained with exemptions and phase-outs significantly increased and exclusions for estate, gift and generation-skipping transfer (GST) taxes.

The minimum tax (the precursor to the AMT) regime was enacted in 1969 to address a concern that a number of very wealthy individuals were paying far less income tax than Congress considered fair. Often these taxpayers benefited from preferential tax law provisions in favor of the taxpayer. Congress specifically identified for disallowance in the AMT regime certain of these deductions, credits, and income exclusions (explicit preferences). Taxpayers enjoying explicit preferences to a certain extent would not be surprised if they were subjected to AMT. However, because the AMT exemption was not indexed for inflation until recently (and because the AMT exemption became subject to phase-out), many taxpayers began to find themselves subject to AMT even if their explicit preferences were not, relatively, as large as they were decades before. This Article distinguishes explicit preferences from "transactional preferences," which are all explicit preferences other than the taxpayer's standard deduction and own personal exemption. This Article demonstrates the surprising result that AMT can apply, albeit in limited circumstances, even if there are no transactional preferences (i.e., no excluded income, no credits or deductions for expenditures, and no dependency or spousal exemptions). In other words, the identified circumstances reveal a taxpayer subject to several thousand dollars of AMT despite having n o transactions other than gross income taxed in the same manner in the regular and AMT regimes. This Article then investigates other examples in which the taxpayer has n o explicit preferences, where we see that many taxpayers are precipitously close to entering AMT, such that a trivial amount of transactional or other explicit preferences will throw them into AMT. [ABSTRACT FROM AUTHOR]

In this paper, the effects of the essential instruments of tax planning related to the effects of the deferral of the repatriation of international income, the effects of the reallocation of international income and the effects of the current and perspective reform tendencies in the EU member countries on the achievements of international tax planning in the Republic of Serbia are valorized. By a meaningful restructuring of its global business transactions, a transnational corporation can gain an „extra“ reduction in the effective tax burden, compared to the level of the tax burden standard, overlooked within the officially established procedure of international tax planning (OECD). As long as there are differences in the corporate income tax rates among the countries, there is a realistic incentive for TNCs to locate their income in low-tax countries and their expenses in high-tax countries. The actual reform tendencies in the EU have a two-sided influence on the achievements of tax planning in the Republic of Serbia, in the form of activating non-tax instruments for an improvement of the competitiveness of the Serbian industry as well as in the form of prolonging international pressure on the budget of the Republic of Serbia. [ABSTRACT FROM AUTHOR]

The American Taxpayer Relief Act of 2012 was enacted by Congress on January 1, 2013 with the aim of averting the "fiscal cliff." It was passed to stave off the increase in taxes for many Americans. The Act allowed the reduction in the Social Security tax to expire and provided a permanent fix for the Alternative Minimum Tax (AMT). However, it only provided temporary measures for many other items and impacted capital gains and dividend rates, itemized deductions, personal exemptions, sales and local tax deductions, child related tax breaks, earned income credit as well as education credits and incentives. It also extended the unemployment benefits for one year, restored several tax breaks for homeowners and addressed federal estate and gift taxes. Overall, the Act contained many good points as well as bad points but has implications for Americans at all income and tax levels. This paper discusses major provisions contained in the Act that affects the majority of American taxpayers. We examine the implications of the various elements of the Act on American taxpayers and utilize numerous examples for illustration purposes at various income and tax levels. We also provide tax planning strategies that can be utilized by American taxpayers to minimize their tax liability so that they are able to maintain more of their paychecks as well as other income. [ABSTRACT FROM AUTHOR]

While considerable attention in the state taxation literature has been devoted to understanding how much of a corporation's income is subject to tax in a state, much less has been placed on understanding the more critical question of whether a corporation is subject to tax in a given state in the first place (Wildasin 2010). This study investigates the antecedents of state income tax nexus and the influence of economic nexus adoption on state corporate tax revenue collections with a two-stage least squares model using an instrumental variable approach and panel data from 2000-2009. The results of this model indicate that adoptions of economic nexus standards are more common in states with a weaker domiciled business group presence, consistent with interest group theory; adoptions are also more common among states with no required combined reporting, no NOL carryback provisions, the imposition of an alternative minimum tax (AMT), and a higher gross state product. Interestingly, after the first year of adoption, states that adopt economic nexus standards have no statistically significant difference in corporate tax revenue collections compared to those that follow a physical presence standard. In additional analyses, we determine that the interactive influences between diffusion and political factors and between diffusion and interest group factors also affect states' economic nexus adoptions. These results contribute to the taxation literature by suggesting that states' economic nexus standard adoptions are carried out for interest group, political, and regional diffusion reasons, and are not associated with any long-term discernible effects on state corporate taxation revenues. [ABSTRACT FROM AUTHOR]

The article presents a reprint of the article "Let's settle on a top number for everybody," by John H. Cochrane published in the "Wall Street Journal. It focuses on the alternative maximum tax (AMaxT) which is way for reducing taxes and related economic damages. It discusses how much tax is taken by the government on people's income in the name of alternative minimum tax (AMT) and when taxes started causing damages to the economy.

The article discusses U.S. government tax expenditures in the aftermath of a financial crisis in America involving fiscal policy, government spending, and a budget deficit in late 2012. The government's apparent use of tax money to stimulate the economy is addressed, along with federal tax laws, exemptions, and deductions. The nation's Internal Revenue Code is mentioned, as well as real property taxes, the alternative minimum tax, and housing expenditures.