Displaying items by tag: taxes

(New York)

It has just been announced that New York state is opening a tax probe into the Trump family. The scope of the investigation will be extensive, digging into the president’s inheritance form decades ago. The investigation was prompted by an extensive article published by the New York Times which alleges fraud in Trump’s tax affairs. The NY state department of taxation said it was “vigorously pursuing all appropriate avenues of investigation”. The New York times alleges that Trump undertook “dubious tax schemes during the 1990s, including instances of outright fraud”.

FINSUM: Here comes another potential legal headache for Trump.

(New York)

One of the important elements of last year’s tax changes that has not been covered much by the mainstream financial press is the way in which the new tax code proves a big boon for REITs. That big gain is that the effective tax rate on REITs has been slashed from 37% to just 29.6%, a big move downward. One REIT industry expert summed up the changes this way, saying “Now, REITs have even more of an advantage over fixed-income products … Seventy percent of REIT returns have historically come from income, so any relative pickup in income is a big benefit for investors”.

FINSUM: This seems like a big help to REIT investors, and it couldn’t have arrived at a better time given that rate rises will inevitable hurt REITs a bit.

(New York)

At the end of August, the IRS closed the door on the numerous high-tax states that were trying to classify their residents’ taxes as charitable gifts so as to make them deductible. That moved slammed the door of options shut for New York and New Jersey residents. However, the IRS didn’t close the door to other workarounds, and Connecticut apparently has a favorable model that specifically applies to pass-through entities. The workaround allows full deduction to the previous tax level for users through an income credit system on taxes paid.

FINSUM: One wonders if the IRS will just move on to shutting these programs down or whether this is a model that other states can build on.

(Washington)

By far the biggest focus of the recent tax package has been its limiting of SALT deductions to just $10,000. The current implementation of the rule was considered phase one by Republicans, with phase two—making the changes permanent—supposed to happen this fall. However, given how tight the congressional races are, including in high tax states like New York, New Jersey, Minnesota, and Illinois, many Republicans are now considering delaying the vote so that sitting representatives don’t have to take a stand on the package.

FINSUM: The SALT limits are wildly unpopular in many locations, and the Republicans are rightfully worried that pushing for making them permanent could cost them some seats. Will this eventually lead to the repeal of the rule?

(New York)

The IRS just ended the best loophole in town for high income residents of high tax states like New York, California, Connecticut, New Jersey and Washington DC. Many high tax states had been working a loophole where residents could categorize their tax payments as charity donations, allowing them to deduct it from their taxes. However, the IRS has now closed that loophole effective today, meaning there is no way around the $10,000 SALT deduction limit.

FINSUM: It is no surprise home sales in the northeast are plummeting, as this is a serious economic issue for retaining the wealthy, and even upper middle class.