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Ext. PublicationThe Tax Navigator – Spending Bills, Bonus Depreciation and Self-Employment Tax Updates
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Join Sean Muller, The Tax Navigator, as he provides an update on recent congressional activity, including progress on spending bills and new IRS bonus depreciation regulations. He also discusses health care negotiations and a significant taxpayer-friendly court decision on the self-employment status of limited partners, with more legal developments expected.
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Detailed Description of The Tax Navigator – Spending Bills, Bonus Depreciation and Self-Employment
00:00:00
Sean: Alright. So, another busy week in Congress.
00:00:03
Sean: The House passed the spending bill for the IRS, and they passed some other spending bills as well, and the Senate has pushed that back.
00:00:12
Sean: So, we have this January 30th deadline for a lot of things, and they are agreeing to agree right now on these different things, but they’re all going on recess. So, this is a big week to try to get everything signed up.
00:00:25
Sean: Treasury released the bonus depreciation regs last week. We talked about that last week and a notice that was sent out. They released that this past week, and there is more to come on qualified production property.
00:00:37
Sean: On the bonus depreciation regulations, the only thing that really was substantive in there was that they are allowing self-constructed assets to do a component election. So, if you’re adding assets after the construction period, you can actually make a component election and take bonus depreciation on those items.
00:00:54
Sean: They were hoping to get health care out there because obviously that’s a gating issue heading into midterms this next fall. And the Republicans and Democrats were working together on an extension of ACA credits.
00:01:05
Sean: And then last Thursday, President Trump came out with his own health care plan that he wants everybody to act on immediately. As a result of that, we’re kind of back to square one on the ACA credits.
00:01:15
Sean: There was a big case that was settled on Friday. It’s actually in the Fifth Circuit, which covers Texas, and it deals with limited partners. We’re going to do a to go through it more in-depth, but this is actually the first taxpayer-friendly case we’ve had in the self-employment issue with limited partners.
00:01:34
Sean: So that was decided as a majority opinion on Friday. And other cases that are out there, Soroban and Denham, are both at the Court of Appeals right now, and we’ll see what happens with those.
00:01:46
Sean: But basically, the Tax Court took a position. They said, “We have to take the same position that Denham and Soroban did on these cases.” They don’t deal with the functional test of a limited partner versus the state law definition of a limited partner.
00:02:00
Sean: And the Fifth Circuit came out and said, “No, you have to follow the definition that’s in the law until a limited partner can be exempt from self-employment tax.”
00:02:07
Sean: So certainly, more to come on that.
This episode of The Tax Navigator was recorded prior to publication. Some references or updates discussed may reflect information current as of the recording date.
