Thanks.
by EricCartman (2024-02-26 14:32:42)

In reply to: Outdated. Congress codified in the next COVID bill  posted by gregmorrissey

Cannot Reply Return to Political

It is funny how the IRS went with the correct approach, only to be nuked by Congress.

FWIW, I agree that double-dipping here is wrong. Props to Mnuchin for taking the proper stance.

Last week, the IRS said it would deny those deductions, citing a tax code section that prevents companies from taking deductions tied to tax-exempt income. Allowing the deductions, the agency argued, would offer a double benefit.

Treasury Secretary Steven Mnuchin has defended the decision.

“If the money that’s coming is not taxable, you can’t double dip,” he said on Fox Business on Monday. “This is basically tax 101.”

If the deductions are allowed, businesses could use them to offset other income. If companies are losing money, they could use the deductions to offset past years’ income and get refunds.

For example, consider a company that gets a $100,000 loan and whose owner has a 22% tax rate. If the business pays $100,000 worth of deductible expenses and has the loan forgiven, that would provide a $22,000 tax benefit on top of the loan forgiveness.

Members of Congress say this benefit is exactly what they intended.

“As was expressed to Treasury during the development of the PPP, we did not intend to deny the deductibility of ordinary and necessary business expenses, nor did these small businesses expect to lose deductions for their business expenses when they applied for a PPP loan,” wrote Sen. Chuck Grassley (R., Iowa), Sen. Ron Wyden (D., Ore.) and Rep. Richard Neal (D., Mass.) in a letter to Mr. Mnuchin. All are leaders of the congressional tax-writing committees.

Their letter also argued that the IRS misinterpreted the existing tax code section that denies deductions related to tax-exempt income.

Messrs. Grassley and Wyden are also backing a bill from Sen. John Cornyn (R., Texas) that would expressly allow the deductions, according to Mr. Cornyn’s office. Rep. Lizzie Fletcher (D., Texas) is introducing a similar bill in the House.



Hope you understand my frustration over the last 2 years
by gregmorrissey  (2024-02-26 21:48:25)     cannot delete  |  Edit  |  Return to Board  |  Ignore Poster   |   Highlight Poster  |   Cannot reply

The double dip is just a preposterously insane policy. As I said a few posts ago, it would be equivalent to letting student loan borrowers take an income tax deduction on the forgiven loan amounts. No one would ever even suggest that because of how stupid it would sound.

I do find it curious that so many PPP recipients here that are pretty vocal on student loan forgiveness don't seem to have any rebuttal or acknowledgement to my posts on the double dip or the fact that $12k saved in capital gains tax in a 529 vehicle is not any different than $12k in loan forgiveness. The only difference is the timing of the benefit. Sure, one was approved by Congress and the other was an executive order, but from a financial standpoint, they are equivalent.

Also, I suppose we'll just ignore the massive government bailouts and zero interest rate policies from post-9/11 to 2009 Financial Crisis to Trump tax cuts to 2020 COVID relief that were essentially a transfer of wealth to America's investor class. It just blows my mind that some people here can be so oblivious to their misplaced selective outrage.