Write-Off: The Tax Blog

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In Defense of Losses – The Hill

Jeff Hoopes, UNC
October 10, 2020

What do Barack ObamaElizabeth WarrenHillary ClintonKamala HarrisJimmy Carter and Franklin Roosevelt all have in common? They are all losers. So are Dick CheneyNewt GingrichJeb Bush and George W. Bush. At least, according to their tax returns. All of these politicians have attempted to generate income through trading stock, renting real estate or conducting a trade or business but, in at least one year, have failed to post a profit associated with these undertakings, and instead generated a loss. And, just like more than one million U.S. taxpayers in 2018 have done, all have claimed some type of loss as a deduction on their tax return.  The recent revelation of Trump’s tax returns has started a national discussion regarding the deduction of losses. The tone of most news coverage seems to regard deducting a loss as if it were some shady tax planning scheme that requires a Swiss bank account and an expensive accountant in the Cayman Islands. Claiming losses, whether generated by rental real estate, as part of a business, or resulting from the sale of stock, is a fundamental part of our tax system. If you don’t make money, you don’t pay taxes.

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Academic Commentary On the Trump Tax Returns

Jeff Hoopes, UNC
October 06, 2020

As I mentioned in a previous quote, I emailed about 45 of my academic accounting colleagues and asked what they thought about the Trump tax return revelations by the New York Times. These are extremely smart people who know a lot about tax, and, as far as I have been able to gather, are incredibly even-minded and non-partisan about the whole thing. Here is the distillation of the comments into 9 different themes:

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Who Leaked the Trump Tax Returns?

Jeff Hoopes, UNC
October 03, 2020

As I have been reading the commentary on the Trump tax returns, of the many questions that remain are “who leaked these returns?” There are a few possibilities. I decided I would poll my fellow accounting academics. I emailed about 45 accounting researchers who specialize in tax. I had 15 respond. One question I asked was “Who do you think leaked the tax return information to the New York Times?” Several people simply said they had no idea, and, some preferred not to be quoted. But, of those giving me permission to quote them, here are the opinions on how those returns got to the New York Times:

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A Mountain of Trees – Brief Thoughts on the Trump Tax Returns

Jeff Hoopes, UNC
September 30, 2020

People sometimes say that the big picture is missed by saying someone “can’t see of the forest for the trees.” Recently, the New York Times obtained a mountain of tax return information regarding President Trump. As I have been reading it, the report seems like a mountain of trees. Lovely trees. All sorts of different kinds. And so many of them. All in a giant mountain. But, for the mountain of trees, you have no idea what the forest that they cut down to produce the mountain actually looks like. I don’t feel like I know any more about Trump’s actual tax situation before the report than after. However, as I read the report, I had the following questions:

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What if a Rogue IRS Employee Leaked Trump’s Tax Returns?

Jeff Hoopes, UNC
September 30, 2020

The New York Times assures us that the source of the Trump tax returns had them legally, and, since they are always truthful, I am not sure why we should doubt this. In my mind, this assertion would preclude an IRS employee as the leaker, because an IRS employee who possessed the returns for non-IRS businesses (like leaking to the New York Times) would be in violation of the law (one applicable law here is the amazingly named “Taxpayer Browsing Protection Act of 1997”, which is now in the Internal Revenue Code as Section 7213A—you may have not previously known the Internal Revenue Code protects you, as a taxpayer, from being "browsed"). But, while data security is a huge priority at the IRS, the IRS certainly is not flawless when it comes to data security. No one is, or really can be. What if someone at the IRS did leak?

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Good Job, IRS (no, really)

Jeff Hoopes, UNC
September 29, 2020

There is an amazing amount of material coming from the New York Times expose on the Trump tax returns. As I read this material with great interest, one thing (of many) that stands out is how amazing it was that it took 5 years for this moment to occur. Why has it been so hard to get the Trump tax returns? For example, it has surprised me that someone at the IRS had not leaked the returns, willing to lose their job and face some fines or jail time in order to get the returns out. Here is one reason this lack of IRS leakage surprise me:

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What is the Angel of Death Tax Loophole?

Jeff Hoopes, UNC
August 05, 2020

Joe Biden has said he wants to get rid of the step up in basis at death for capital gains taxes. That sounds like kind of a boring thing to get rid of. He should spice up his campaign by calling this tax thing what it is sometimes also known as—the angel of death loophole. What is the angel of death loophole?

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Happy Birthday to One of Our Country’s Oldest Tax Enforcers!

Jeff Hoopes, UNC
August 04, 2020

Today, August 4, marks the 230th birthday of one of the oldest tax enforcement agencies in the United States. Started when our country was in its infancy to provide revenue for our new nation, this still-operating body celebrates its noble birth today. So, what is this group? The IRS? No. The IRS is not nearly 230 years old. So, who then?

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Happy First Birthday, Write-Off!

Jeff Hoopes, UNC
July 29, 2020

On July 29th, 2019, the first Write-Off blog post was posted. In the year that followed, we have had 56 content-filled posted—more than one a week. There have been about 27,000 words written on this blog, which is about 30% of the entire Internal Revenue Code (of 1938)! Whole months have gone by without a post, and, some days get more than one post. I would just like to write and thank all of you for supporting this effort, who have stopped me at conferences and mentioned the blog, who have sent emails with interesting tips or tax facts, or just emailing to comment on a post. Thank to all who have sent flowers, chocolate, and old tax returns. Finally, thank you to all who read these posts and I only know exist because Google Analytics tells me someone else visited the site (especially you--the person from somewhere in Tunisia who visited sometime in December).

Thank you! Please don’t hesitate to email me (hoopes@unc.edu) and let me know what you think.

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Should We Think about Funding the IRS Like Investing In a Business?

Jeff Hoopes, UNC
July 27, 2020

Should we think of the IRS like a business when thinking about how to fund it?  The New York Times recently ran an article arguing for greater investment in the IRS. The IRS has been tasked with a lot lately, from enforcing the ACA, distributing COVID relief checks (and likely a second round of them), to just enforcing the tax law as usual. And, they could certainly stand to be better funded. Staffing levels are shrinking, systems are increasingly outdated, and the financial situation is, indeed, not great. As the IRS noted in a recent budget request, “Every taxpayer service and enforcement statistic has declined considerably since 2010.” But, several parts of the New York Times article talk about funding the IRS like a business investment—as long as you get back more than you invest, you should keep investing (if the project is positive NPV, for all you MBA-types out there).  Should we think about funding the IRS like investing in a business?

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