Hillary Coming After Your Capital Gains!

Hold on to your wallets, you Dems out there.  Here comes Hillary – after all of us, actually, and not just you!

Last week she made known her plan to significantly increase the tax on long term capital gains for we and thee!  It’s currently 20% (plus, of course, the Obama exaction of another 3.8% to help save Medicare) if your holding period is at least one year, but Hillary wants to raise it all the way up to 39.6% unless you hold on to your capital asset for six years or more!

Not quite sure whose votes she’s after with this, as she seems to be even further sagging in the polls.

And here comes the Government Accountability Office (GAO) with a scathing report on IRS less than satisfactory criteria, processes and controls for selecting exempt organizations for audit.

Recall that organizations seeking exemption from tax must submit an application to IRS for advance approval.  If everything appears to be according to Hoyle, the Revenooers issue a “determination letter,” approving tax exempt status.

GAO evaluated the design and implementation of how organizations are selected for audit.  While it found that the design and implementation of certain examination controls was effective, it found several control deficiencies which just might increase the risk that organizations could be selected for unfair audits, including organizations’ political views.  And guess what – some are concluding that his report suggests what some “Tea Party” organizations have complained about regarding their quest for Section 501(c)(4) status.

And from our “ordinary course of business” department comes a new IRS Chief Counsel conclusion regarding just what in the world is a “casualty loss.”

Seems a rental car company, in this instance, thought it should be entitled to a deduction for a “casualty loss” in those cases in which a customer purchased a collision damage waiver and then went ahead and trashed the rental car.

Under the law, a casualty loss arises from an event which is (1) identifiable, (2) damaging to property, and (3) sudden, unexpected, and unusual in nature.  To be “unusual,” the event must be one that is extraordinary and nonrecurring, that does not commonly occur during the activity in which the taxpayer was engaged, and that does not commonly occur in the ordinary course of the day-to-day living of the taxpayer.

So in this situation, IRS concludes that we and thee are just reckless in dealing with our vehicles, and rental car companies just have to accept that as a fact and condition of doing business.
Collision damages of rental vehicles are not unusual, as they commonly occur in the ordinary course of the day-to-day business of the taxpayer.

So there.

CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.

Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno.  He may be reached at 831-7288, and welcomes comments at jquinn@ashleyquinncpas.com.

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