This week, we start with analysis on the $4.5 trillion cost of extending the 2017 Tax Cuts and Jobs Act with discussion on its net economic impact, we have a piece revealing insights about pre-retirees showing mixed financial confidence but positive overall sentiment towards retirement years, and news regarding the offered “second and final” opportunity to accept buyout offers through April 14 for IRS employees. Additionally, we cover growing concerns about donor-advised funds primarily benefiting other DAFs rather than charities. Lastly, an update regarding a crucial Fifth Circuit case emphasizing the importance of clearly defined business components when claiming research tax credits.
Did you miss last week’s edition? You can find it here.
Budget Reconciliation: Tracking the 2025 Trump Tax Cuts
Extending the expiring 2017 Tax Cuts and Jobs Act (TCJA) would decrease federal tax revenue by $4.5 trillion from 2025 through 2034. Long-run GDP would be 1.1 percent higher, offsetting $710 billion, or 16 percent, of the revenue losses. Long-run GNP (a measure of American incomes) would only rise by 0.4 percent, as some of the benefits of the tax cuts and larger economy go to foreigners in the form of higher interest payments on the debt. President Trump has called for a permanent extension of the 2017 tax cuts, additional policies— including no taxes on tips, overtime pay, and Social Security benefits for retirees—as well as the creation of a deduction for auto loan interest for American-made cars. He has also promised higher taxes on US imports through a series of new tariffs.
Retirement Snapshot: 3 Things to Know About the Average Pre-retiree
By Bryan Strickland for Journal of Accountancy
Whether you’re an individual beginning to eye retirement or a financial planner with a constant eye on helping your clients successfully retire, a snapshot of the typical would-be retiree can provide a perspective worth considering. Concerns about being in a position to enjoy retirement are rampant – nearly 70% of respondents indicated some level of agreement with the statement “I could work until retirement and still not save enough to meet my needs.” However, when asked what words they associate with retirement, 87% selected at least one positive word; just 39% selected at least one negative word. “Freedom” was cited by a survey-high 58%, as all six positive words received more responses than any of the five negative words.
IRS Workers Get Final Chance to Take Deferred Resignation Offer
By Jason Bramwell for CPA Practice Advisor
IRS employees who didn’t accept the Trump administration’s buyout offer earlier this year are being given one more chance to take the offer as more job cuts loom at the tax agency. In an email IRS workers received from the Office of the Assistant Secretary for Management on April 5, Treasury Department employees are being offered a “second and final” opportunity to take a buyout through the administration’s deferred resignation program, which is being dubbed “DRP 2.0.” Applications are being accepted beginning today through April 14, according to the email, which was posted on Reddit and confirmed by several users.
Donor Advised Funds’ Biggest Beneficiaries may be Other DAFs
By Mike Cohn for Accounting Today
Donor-advised funds are continuing to grow while enjoying substantial tax deductions for charitable giving, even as many contributions go to other DAFs and private foundations instead of actual charities, according to a new report. The report, released Monday by the Charity Reform Initiative of the Institute for Policy Studies, found that total DAF assets have grown 67% over the past four years, from $152 billion in 2020 to $254 billion in 2023, despite fluctuations in contributions.
The Research Credit: Business-Component Requirement
By The Tax Adviser
A recent circuit court case, Grigsby,1 emphasizes the need for taxpayers to clearly define business components when preparing and documenting their Sec. 41 research tax credit. The Fifth Circuit determined that the taxpayer failed the business–component requirement and cited that failure as one of two reasons for disallowing the research credit. This article focuses on the taxpayer’s approach to the business–component requirement in Grigsby, the significance of separately analyzing product development and process development, and considerations that taxpayers should make when defining and analyzing business components for the purposes of preparing research credit claims.
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