William Byrnes' Tax, Wealth, and Risk Intelligence

William Byrnes (Texas A&M) tax & compliance articles

TaxFacts Intelligence: Nov 16, 2022

Posted by William Byrnes on November 16, 2022

The Texas A&M Master and LL.M. programs (e.g. international tax, transfer pricing, wealth management, or risk management) are accepting applications from financial professionals and from lawyers. Over 850 enrolled, the enrollment for a course’s section is kept to between 20 and a maximum of 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other via teamwork and peer review. https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

In the past two years, cryptocurrency reporting questions on Forms 1040 have created much confusion for taxpayers who haven’t been sure whether their crypto transactions must be reported. The most recent draft 1040 for 2022 provides some clarity for taxpayers. We also have a summary of recent IRS snapshot guidance on retirement plan investments in third-party loans. Below we repeat some of our reports and analysis that we provided our subscribers.

IRS Releases Draft Form 1040 Clarifying Cryptocurrency Question. The IRS has recently released a draft Form 1040 providing some clarification on its question on cryptocurrency. The question may not be much different than in earlier years, but may provide new guidance by referring taxpayers to the instructions. In 2021, the question read: “At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?”  For 2022, the question could be changed to include other types of digital assets, such as NFTs. The new question will read: “At any time during 2022, did you: (a) receive (as a reward, award, or compensation); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)? (See instructions.)”.  While the draft instructions have not yet been released, many hope that those instructions will clarify the meaning of the term “digital asset” and the meaning of virtual currency generally. For more information on the tax treatment of virtual currency, visit Tax Facts Online. Read More 

IRS Releases Snapshot With Guidance on Third-Party Loans and Qualified Plans.  
The IRS issued a snapshot addressing certain audit and compliance issues about qualified plan investments in third-party loans.  Qualified retirement plans are not explicitly prohibited from investing in third-party loans.  The IRS snapshot reminds taxpayers that the plan may not lend money to disqualified persons or make loans that benefit those disqualified persons.  Further, plan assets may only be used for the exclusive benefit of participants and beneficiaries.  Auditors will examine investments in third-party loans to confirm that the primary purpose of a loan is to benefit participants.  Defined contribution plans are also required to value plan assets at least once per year to determine their fair market value.  Auditors are instructed to carefully review Forms 5500 for asset loan values that don’t vary much from year to year–which may indicate that loan payments have not been made or that their fair value isn’t properly being determined and reported.  Overvaluing a loan can also cause a defined benefit plan to overstate their funded status, which can lead to failures to satisfy minimum funding requirements.  For more information on the prohibited transaction rules, visit Tax Facts Online.  Read More

February 23, 2023 is the Last Day to Correct Excess 2021 IRA Contributions for Hurricane Ida Impacted Taxpayers.  Taxpayers who make contributions that exceed the annual IRA contribution limit are subject to a penalty tax of 6% of the excess for each year the excess contribution remains in the account.  Taxpayers who inadvertently made excess contributions to their IRAs have until the tax filing deadline (including extensions) to correct the excess distribution.  For 2021, that meant taxpayers must take action to remove the excess contributions from their accounts by October 17, 2022.  The IRS has announced that taxpayers who were impacted by Hurricane Ian will have an extension so that they have until February 15, 2023 to file 2022 individual and business returns.  For more information on the rules governing excess IRA distributions, visit Tax Facts Online.  Read More

Look in your Tax Facts Online app for our continuing analysis of 2022 and 2023 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is #1 for U.S. public universities, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school, ranked in the 1st tier of law schools and is ranked in the top 10 for the employment of its graduating law students among U.S. law schools.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: