Weekly Digests

This was a cool week for me, starting with Saturday evening catching up with some high school friends and my cousin at our Far Rockaway HS reunion, followed by an afternoon of harvesting a bumper crop of purple figs, beefsteak and San Marzano tomatoes at my friend’s house on Sunday (after picking greens in my garden that morning).  During the week I hosted/attended 2 really great accounting webinars, then checked out the blue moon on Tuesday and Wednesday evenings.  Does anyone know the lyrics?  I was “standing alone” on the beach at 10:30 PM Wednesday evening and then again Thursday morning at 6:30 AM; was it something I said?  Our office did not “stick to” our last 90-day action plan which would have put us at completion of all extended business and individual tax returns by the end of June, rather than August 29th (our new goal), but we spent more time outdoors and did not work weekends or overtime.  We still have plenty of things to look forward to before Labor Day and the official end to summer.  As the summer winds down our office is focusing on completing those business tax returns that are still on extension as we prepare for:  a European Vacation (Monica), a few days off (Myriam), working remotely from home (Raquel), less pressure from work (Elizabeth), and my family arriving for a visit next Friday (Andrea).  For my “now” out-of-town family it’s all about NYC food and events. Obviously, there will be pizza from Brooklyn as soon as they arrive, then bagels with veggie cream cheese for breakfast Saturday morning before we all pile into our cars and head for a day at the U.S. Open in Flushing, Queens.   We are planning for a Sunday Broadway matinee and dinner at one of the local restaurants with a view of sunset over Jamaica Bay.

Glad to be able to help my friend harvest her amazing summer garden figs & tomatoes on Sunday afternoon…

From my garden to table lunch/dinner, the best…

Back out on the beach at sunrise after the weekend storm, it’s just me and the gulls and the beach crews cleaning up the seaweed…

Our NCCPAP Lunch & learn Wednesday at 12 PM was chock full of important information that our office will put to use as we work on our extended business tax returns, (I was tempted to cut the class and spend more time at the beach)….

Of course no other “crazy people” were out on the beach Wednesday at 10:30 PM; Blue Blue Moon, I was standing alone….

The beach was still deserted Thursday morning, but it was nice to walk barefoot on the sand….

I set up this blog post last night, so I was able to catch sunrise this morning, then cycle on my “pele” in time to post…

I am hoping you all have great plans for the weekend, my weather app is predicting clear skies and cool weather, enjoy!

WEEKLY TAKE-AWAY

Yesterday’s 4-hour NYS Ethics webinar started with a slide of the photograph of a notorious serial killer behind bars and the reminder that if you follow your instincts and do the right thing you will most probably be exhibiting ethical behavior.  The photo: Hannibal Lector; the tale the “conversation” between Hannibal and his FBI profiler.  They discussed how Hannibal when given the opportunity had almost “gutted” the FBI agent (Clarice in the movie “Silence of the Lambs” , as the agent put herself in danger by not following HER INSTINCTS.  It works for me.  At the end of the session, I asked about applying the rules about information disclosure consent requirements of business/individual information in relation to Beneficial Ownership Information Reporting (BOI) under the Corporate Transparency Act (CTA).  We will be assisting clients in their filing with or without a third-party provider, including “sensitive” information in the supporting documentation.  Common sense:  set up a “Consent to Disclose to Third-Parties Authorization” signature document as part of our process and get approval from ALL “Beneficial Owners” of the business.  I’ll be adding that recommendation to our BOI seminar slide-deck for our next set of presentations and maybe a photo of Hannibal Lecter behind bars too, just for fun…

TAX ISSUES/TAX PLANNING

IRC Section 7216 Consent When Using a Third Party to Assist with Beneficial Ownership Information (BOI) Reporting Under the Corporate Transparency Act (CTA)

While both FinCEN and the IRS are in the Treasury Department, under the 7216 Regs., sharing tax information with a government department outside of the IRS, even another division of Treasury, does not appear to be a “permissible disclosure” of client tax information without the IRS required form of taxpayer consent.  As mentioned in my weekly takeaway “follow your instincts”:  ethics and IRS rules dictate an accounting professional’s behavior when it comes to disclosing information to third parties.  This is a common theme when someone is looking to obtain a mortgage in connection with their  home purchase. The mortgage broker will contact us for income verification and other personal information about a client, which we are not able to release without first obtaining authorization under IRC 7216.   It seems there may be an IRC Sec 7216 issue when working with a third-party provider who will assist in Beneficial Ownership Information (BOI) reporting as well.  Our firm will provide information to an external BOI report preparation company who will assist in preparing the submission.  We will use a secure portal, but if that information is tied to tax return preparation information and includes the type of personal information as required for a complete submission, we will need to get a signed “Consent to Disclose to Third-Parties Authorization” as part of our process.  Where there are multiple Beneficial Owners, we will need to obtain approval from all “Beneficial Owners” of the business entity.  So many hoops…

Federal Tax Update: A Six-Month Look Back

I have covered several of the developments that have transpired with regard to individual taxpayers so far this year but this analysis as copied and pasted from a recent article from AccountingToday.com, one of the online accounting newsletters I subscribe to is a great summary:

• “Final regulations under Code Sections 170 and 786 follow prior proposed regulations limiting charitable contributions flowing from partnerships based on conservation easements to 2.5 times the sum of each partner’s “relevant basis” and determine how to compute relevant basis for such purpose.
• In Stead v. Commissioner, the Tax Court in a bench opinion required a corporate owner to report signed but uncashed checks as income but not unsigned uncashed checks except to the extent that withholdings had been paid over.
• In Estate of Finnegan v. Commissioner, TC Memo 2024-42, the Tax Court concluded that settlement proceeds paid by a state as a result of improper findings of abuse and neglect of the plaintiffs’ children were taxable as paid for violation of their civil rights and not for post-traumatic stress disorder which had little or no mention in the complaint, jury instructions, voir dire questions or otherwise.
• In Amos v. Commissioner, 133 AFTR2d 2024-1267, the Eleventh Circuit Court of Appeals agreed with the Tax Court that a CPA who owned several burger franchises could not substantiate over $4 million in net operating losses dating back 15 years when no original records were produced except tax returns and a carryover worksheet.
• In Notice 2024-46, the Internal Revenue Service determined that payments made by Norfolk Southern to individuals affected by the 2023 train derailment in East Palestine, Ohio, are tax-free disaster payments as the result of “an event of catastrophic nature;” payments for lost wages and payments to businesses were determined to be taxable.
• In Announcement 2024-19, the IRS indicated that amounts received from the Department of Energy for home energy rebate programs are not income but constitute a reduction in price paid for the home improvements.
• In Announcement 2024–26, the service announced that it was reciprocating actions by Russia to negate portions of the tax treaty between the countries designed to avoid double taxation.
• In News Release 2024-174, the IRS indicated that it will be sending offers in July to many taxpayers who participated in syndicated conservation easements but who have not settled their cases.
• In Fact Sheet 2024-13, the IRS stated that the value of work-life information and referral services offered by an employer are generally exempt from taxation as de minimis.
• In Letter Ruling 202426011, the IRS ruled that a pre-2019 postnuptial agreement is a “divorce or separation instrument” allowing an alimony deduction based on such agreement to be deductible to the payor and income to the recipient (the result should not be different if it were a prenuptial agreement).”

Next week I will include those provisions relating to retirement and retirement planning.

ECONOMY

CPI Inflation Comes in at 2.9%; Better Than Expected

As reported in this recent article from Forbes.com:  “Inflation was lighter than forecasted last month, according to data released, as Wall Street pays close attention to weakening which should bolster the case for the Federal Reserve to lower interest rates.”

Is the Federal Reserve Ready to Start Cutting Interest Rates?

As per this recent article from TheWeek.com:  “The recent slide in financial markets could lead to “aggressive rate cuts” by the Federal Reserve, said CBS News.”  Read the full article for comments from various economists.

With US Economy Humming, a Quarter Point Will Do

As reported in this recent article from Reuters.com:  “The U.S. economy is doing just fine and markets now accept a quarter-point rate cut from the Federal Reserve next month will be enough to get the easing cycle going as disinflation resumes.  That was the basic conclusion from a torrent of macro economic updates on Thursday that showed American shoppers in fine fettle, WalMart  upping forecasts and jobless claims ticking lower.

Rules for Buying and Selling a Home are Changing; the Result of a Recently Settled Lawsuit

As reported in this recent article from CBSNews.com:  “When it comes to buying and selling homes, new rules are about to be put in play, five months after the National Association of Realtors agreed to a blockbuster settlement over how its 1.5 million agents across the U.S. are paid commissions.  The settlement — which resolved litigation stemming from a grand jury finding that the real estate group artificially inflated brokerage commissions — brings sweeping changes to the industry.

The adjustments come as prospects brighten for the beleaguered housing market. Mortgage rates earlier this month tumbled to their lowest level since April 2023, offering hope to house hunters priced out of the market given high borrowing costs and home prices that reached a record in June.

Still, the current rate on the 30-year fixed loan stands at about 6.5%, or more than double the sub-3% rates available in 2020 and 2021. The Federal Reserve in September is widely expected to reduce its benchmark interest rate, a step that should reduce mortgage rates currently high enough to bring turnover in the housing market near 40-year lows.

In the meantime, real estate agents across the nation will have to adopt to new changes that could potentially reduce the commission that home sellers are asked to pay. ”

Inflation Continues to Plague Main Street

As reported in this recent article from NFIB.com:  “The NFIB Small Business Optimism Index rose 2.2 points in July to 93.7, the highest reading since February 2022. However, inflation remains the top issue among small business owners, with 25% reporting it as their single most important problem in operating their business, up four points from June.”

Everyday Americans are More Confident in the U.S. Economy than in Their Personal Finances

• IRS resources for stimulus payments:
  • Use the Get My Payment tool to check on EIP payment status
  • Eligibility and general information about Economic Impact Payments
  • A list of frequently asked questions for stimulus payments
• IRS information about the Advance Child Tax Credit Payments
  • Portal to update information
  • A list of frequently asked questions on the advance Child Tax Credit Payments
• The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
• Our prior blog posts, videos and prior weekly newsletters
• Entrepreneur put together a listing of free tech resources for remote work
• The Consumer Financial Protection Bureau has warnings about COVID-related scams
• The New York Times has an online newsletter on K-12 and higher education
• The Wall Street Journal has a collection of articles on education
• The Louvre has digitized 482,000 artworks from its collection
• How to create a strong password

We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are here for you.

If you need help with your accounting, want to create a tax minimization plan, want to discuss your business growth plan or your finances, are concerned about retirement goals or need to be held accountable for your 90 day action plan, contact us for a complimentary discovery session or an appointment to just get started

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