The tax bill that Donald Trump signed into law in late December represents the most substantive changes to the federal tax code in 30 years, but Congress passed up its chance to clarify matters for cryptocurrency investors, traders, issuers and miners. The community is left with a host of questions and ambiguities; but while the tax bill does not directly address cryptocurrencies such as bitcoin, ether and the tokens issued through ICOs, it does impact them indirectly.

Especially important are changes to six provisions in the tax code: like-kind exchanges, loss carrybacks, the corporate tax rate, the business interest deduction, miscellaneous personal deductions, and the treatment of pass-through businesses.

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Contact: Charles F. Schultz III

INDIVIDUAL TAXATION

The Act simplifies the Internal Revenue Code (the “Code”) for individuals by consolidating various exemptions and deductions into a larger Standard Deduction. The Act does not make changes with respect to the maximum rate for capital gains and qualified dividends. The Act lowers overall income tax rates but does not reduce the number of brackets. The Act does eliminate the individual mandate tax related to the Affordable Care Act.

Read more: An Overview of the “Tax Cuts and Jobs Act of 2017”

As we approach the end of the year, it is time to consider some tax planning opportunities that may be available to you for 2017. The planning points outlined below are not intended to serve as specific advice; you should always consult your D&H Group LLP advisor before implementing any of the suggestions contained in this newsletter.

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Article written by FGMK Tax Partner Charles F. Schultz III and Senior Tax Associate Jeffrey Golds

The Senate version of the "Tax Cuts and Jobs Act of 2017" includes a provision that would require taxpayers to use the first-in, first-out ("FIFO") valuation method with respect to any security sold, exchanged, or otherwise disposed of.  Specifically, effective January 1, 2018, taxpayers would be required to use the basis of the earliest acquired shares of any stock sold when determining capital gain recognition.   For many taxpayers, the earliest acquired shares also happen to be the shares with the lowest basis, resulting in greater capital gain recognition.

Read more: FGMK Tax Alert: The Senate Tax Proposal and an Important Year-End Capital Gain Planning Update

Domestic abuse often includes control over finances. An important part of managing finances is understanding one’s tax rights. Taxpayers have the right to expect the IRS to consider facts and circumstances that might affect the individual’s taxes.

Taxpayers have the right to:

  • File a separate return even if they’re married.
  • Review the entire tax return before signing a joint return.
  • Review supporting documents for a joint return.
  • Refuse to sign a joint return.Request more time to file their tax return.
  • Get copies of prior year tax returns from the IRS.
  • Seek independent legal advice.

Taxpayers also have the right to request relief from the liability shown on a joint return. This is known as innocent spouse relief. Here are a couple of examples:

Read more: U.S. Taxpayers Who are Victims of Domestic Abuse Should Know Their Rights