Here’s a look at recent tax-related happenings on the Hill, including a nonpartisan organization’s updated economic models for the presidential hopefuls.
Lately on the Hill
Economic Modeling Updated by the Tax Foundation Following Recent Presidential Tax Pitches
The Tax Foundation has updated its economic models for recent tax proposals offered by presidential candidates Donald Trump1 and Kamala Harris.2
The estimated cost update to Trump’s platform includes a 15% corporate tax rate for domestic production, eliminating the $10,000 cap on deductions of state and local taxes, exempting overtime pay from income tax, and a deduction for interest paid on car loans. These new initiatives are in addition to myriad proposals already introduced by Trump, such as making permanent certain Tax Cuts and Jobs Act provisions, terminating certain clean energy subsidies, and implementing tariffs.
According to the revised estimate, federal tax revenue is expected to decline by $3 trillion over the next 10 years on a conventional basis, or by $2.5 trillion on a dynamic basis. The estimated $7.8 trillion in tax cuts would be offset primarily by two proposals—repeal certain of the Inflation Reduction Act’s clean energy credits and tariffs on imported goods—expected to generate $921 billion and $3.8 trillion, respectively, over 10 years.
Regarding the economic effects of Trump’s tax propositions, the Foundation estimates they would increase gross domestic product (GDP) by 0.8%, decrease gross national product (GNP) by 0.1%, increase capital stock by 1.7%, increase wages by 0.8%, and increase full-time equivalent employment by 597,000 jobs.
The nonpartisan organization complimented Trump’s proposals to provide permanent expensing of capital assets and research and development costs as “well-designed” and “efficient ways to promote long-run economic growth,” while opposing his ideas to exempt tips and Social Security income from taxation and the imposition of tariffs “as tariffs invite foreign retaliation.”
Tax platform updates from the Harris campaign include the proposed America Forward credits—providing around $100 billion to support investments in strategic industries such as manufacturing, energy, and agriculture and supporting American workers. These credits augment Harris’ already extensive tax platform that includes an increase to the corporate tax rate, a first-time homebuyer tax credit, and a commitment to not increase tax on taxpayers earning less than $400,000 per year.
Federal tax revenue under Harris’ plan is estimated to increase by $1.7 trillion over 10 years on a conventional basis and $642 billion on a dynamic basis—resulting from a shrinking economy. Revenues would be primarily generated from corporations estimated at $2.2 trillion, followed by individuals at $1.2 trillion through 2034.
Considering the economic effects of Harris’ tax platform, it is estimated that the plan would decrease GDP by 2%, decrease GNP by 1.8%, decrease capital stock by 3%, decrease wages by 1.2%, and decrease full-time equivalent employment by 786,000 jobs.
The Foundation welcomes Harris’ “pro-investment incentives,” while commenting that her policies to raise top tax rates on corporations and individuals would cause “slowing economic growth and reduc[ed] competitiveness.”
The Judicial Report
Partnership Argues IRS Not Following Congressional Intent for Conservation Easement Contributions. Ramsey Land Company, LLC v. Commissioner, T.C. No. 16286-24.
Ramsey Land Company, LLC and its partnership representative, Mountain Resort, LLC, filed a petition in the U.S. Tax Court requesting a dismissal of an IRS Final Partnership Administrative Adjustment rejecting the taxpayer’s charitable contribution deduction for a conservation easement.
Ramsey asserts that its qualified appraisal appropriately used the highest and best use of the conservation easement as an active adult community valued at $42,850,000. The IRS offered alternative allowable contribution values ranging between $320,000 and $1.5 million. Ramsey argues that such IRS determinations are based on selling the land as is and “[ignore] the profits which taxpayer is giving up by forgoing the development option and conserving the property.”
The petition contends the IRS is not following Congress’ intent and “has exceeded its statutory authority by effectively legislating through its interpretation of ambiguity,” directing the court to the U.S. Supreme Court’s landmark ruling earlier this year in Loper Bright Enterprises v. Raimondo, which ended deference to agency interpretations.
Earlier this month, the IRS issued final regulations (T.D. 10007) designating certain syndicated conservation easement transactions and similar transactions as “listed transactions”—transactions the IRS has deemed as abusive and subject to additional reporting and scrutiny.
Since the Loper Bright ruling, Tax Court petitioners have increasingly invoked its tenets to challenge IRS regulations.
From the Treasury & IRS
AICPA Implores the IRS to Provide Guidance on Basis Rules for Digital Assets
The American Institute of CPAs (AICPA) issued a letter3 urging the IRS “to provide additional clarity, further guidance, and greater awareness” regarding safe harbor rules to allocate unused basis of digital assets.
Revenue Procedure 2024-28, released last June, allows for a reasonable allocation of unused basis to a digital asset wallet or account provided the requirements of the procedure are satisfied. Such allocations must be made by January 1, 2025.
Given the proximity of the impending deadline, the AICPA recommends the IRS increase awareness of the rules and provide additional guidance on documentation necessary to substantiate “that the taxpayer has complied with the timing requirements related to the safe harbor.”
If you own digital assets and have questions on these requirements quickly coming due, please reach out to a professional at Forvis Mazars.
Released Guidance
Final regulations (T.D. 10008) address obligations to withhold income taxes on payments or distributions from employer deferred compensation plans, individual retirement plans, and commercial annuities when such payments or distributions are made to recipients outside of the United States.
Final regulations (T.D. 10009) implement the Section 48D advanced manufacturing investment credit. The incentive to domestically manufacture semiconductors and related equipment applies to property placed in service after December 31, 2022 or for eligible property that begins construction prior to January 1, 2027.
Revenue Ruling 2024-24 provides the November 2024 various rates for federal income tax purposes, including the applicable federal rates (AFR), adjusted AFR, adjusted federal long-term rate, the long-term tax-exempt rate, percentages for determining the low-income housing credit, and the AFR for determining the present value of an annuity.
Notice 2024-74 instructs taxpayers regarding sustainable aviation fuel (SAF) credit claims that relate to sales or use of SAF qualified mixtures on or after October 18, 2024.
Notice 2024-75 adds preventive health care benefits eligible under a high-deductible health plan, including contraceptives, breast cancer screening, and glucose monitors.
Notice 2024-77 provides interim guidance on inadvertent benefits overpayments under §414(aa) and the treatment of such overpayments as eligible rollover distributions under §402(c)(12).
IR-2024-269 cautions taxpayers against fake charity scams that often arise after natural disasters such as the recent hurricanes in the Southeastern United States. The IRS advises taxpayers to use the Tax Exempt Organization Search tool to help verify legitimate charities.
AM 2024-002 is an IRS legal advice memorandum describing the application of the §246(b) taxable income limitation on dividends received deductions under §§243 and 245, and global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII) deductions under §250. The release of this memorandum may be indicative of future IRS challenges to certain related taxpayer positions.
This newsletter features developing content that is subject to change at any time. It does not constitute legal or tax advice. Consult your professional advisors prior to acting on the information set forth herein.
- 1 “Donald Trump Tax Plan Ideas: Details and Analysis,” taxfoundation.org, October 14, 2024.
- 2 “Kamala Harris Tax Plan Ideas: Details and Analysis,” taxfoundation.org, October 16, 2024.
- 3 “Guidance for Taxpayers to Allocate Basis in Digital Assets to Wallets or Accounts as of January 1, 2025 [Revenue Procedure 2024-28],” aicpa-cima.com, October 13, 2024.