Swiss Court Halts Release of Some UBS Account Holder Data

From The Journal of Accountancy.  A Swiss court has held that the Swiss bank UBS does not have to hand over to the IRS confidential data on 26 accounts under a settlement agreement between the United States and Switzerland negotiated in August 2009. Under the agreement, UBS is supposed to turn over for investigation information concerning approximately 4,450 accounts. Failure to provide a Form W-9 to the IRS for at least three years is one of the IRS’ selection criteria for account holders who have engaged in “continued and serious tax offense.” UBS must identify such account holders under the agreement. However, in a suit brought by 26 unnamed account holders (U.S. Taxpayers v. Swiss Federal Tax Administration), Switzerland’s Bundesverwaltungsgericht (federal administrative tribunal) held on Jan. 22 that the mere failure to file a Form W-9 does not by itself amount to tax fraud. Therefore, the court ruled that the account holders’ data cannot be handed over to the IRS. While this case only concerned 26 account holders, it is unclear what effect it will have on the other approximately 4,400 accounts potentially subject to the agreement. According to the tribunal’s press release, the decision cannot be appealed in Swiss federal court. The August settlement agreement represented a compromise between the two governments over a contested “John Doe” summons in U.S. v. UBS AG, a case filed in the U.S. District Court for the Southern District of Florida.

President Obama Signs Haiti Charitable Contribution

From today’s TaxProf Blog.  Bill President Obama yesterday signed H.R. 4462, A Bill to Accelerate the Income Tax Benefits for Charitable Cash Contributions for the Relief of Victims of the Earthquake in Haiti. From the Joint Committee on Taxation’s Technical Explanation (JCX-2-10): The provision permits taxpayers to treat charitable contributions of cash made after January 11, 2010, and before March 1, 2010, as contributions made on December 31, 2009, if such contributions were for the purpose of providing relief to victims in areas affected by the earthquake in Haiti that occurred on January 12, 2010. Thus, the effect of the provision is to give calendar-year taxpayers who make Haitian earthquake-related charitable contributions of cash after January 11, 2010, and before March 1, 2010, the opportunity to accelerate their tax benefit. Under the provision, such taxpayers may realize the tax benefit of such contributions by taking a deduction on their 2009 tax return. The provision also clarifies the recordkeeping requirement for monetary contributions eligible for the accelerated income tax benefits described above. With respect to such contributions, a telephone bill will also satisfy the recordkeeping requirement if it shows the name of the donee organization, the date of the contribution, and the amount of the contribution. Thus, for example, in the case of a charitable contribution made by text message and chargeable to a telephone or wireless account, a bill from the telecommunications company containing the relevant information will satisfy the recordkeeping requirement.

Taxorama: 7 changes on the docket

By Jeanne Sahadi, senior writer

January 17, 2010: 2:01 PM ET

NEW YORK (CNNMoney.com) — Everybody’s angry at banks. Federal deficits are wide and need addressing. And the president and Congress are starting to map out next year’s budget.

That means they’re talking taxes in Washington. The capital is awash in proposals for how to raise revenue and score political points.

There’s no guarantee all of them – or even some – will pass.

But they are an indication of the direction the White House and Congress may go as they finalize decisions for how to pay for health reform, reduce debt, support other government efforts and garner votes in a mid-term election year.

Tax banks to make taxpayers whole

President Obama on Thursday called on Congress to recoup any federal bailout money that hasn’t been repaid by imposing a fee on large banks, even if they themselves haven’t taken bailout money, or if they’ve repaid the bailout money they did take.

The “financial crisis responsibility fee” would target 50 major institutions with assets over $50 billion. It’s designed to tax firms with the greatest leverage, which is a proxy for how much risk the firm is taking in the markets.

“This is as much a political statement as it is a tax policy statement,” said Mel Schwarz, director of tax legislative affairs at Grant Thornton LLP.

Some in Congress have already expressed their support for the idea, if not necessarily the specifics. And Jaret Seiberg, a policy analyst at Concept Capital’s Washington Research Group, believes the odds favor enactment of the measure.

“This remains far from a slam dunk, but momentum is building by the day,” Seiberg said in a research note.

Tax banker bonuses more

The populist fury unleashed when bonuses were paid to AIG executives is back. This time it’s during bonus season on Wall Street, where investment banks are expected to distribute tens of billions of dollars to reward their employees for the banks’ 2009 performance.

House Financial Services Chairman Barney Frank, D-Mass., will hold a hearing on Wall Street compensation next week. On the agenda will be consideration of bonus taxation, as well as President Obama’s proposal to tax banks to make up for any bailout money that isn’t repaid.

Frank’s committee doesn’t write tax law. That’s up to the House Ways and Means and the Senate Finance committees. But he is beating the drums for change.

Will the US tax bank bonuses?

“I think compensation has gotten excessive,” Frank said in a statement. “I want to underline what we are already doing. Frankly, in the hope that maybe the Senate will be even more inclined to [act].”

So don’t be surprised if talk of a banker bonus tax is revived. But it’s not clear how viable it would be. “That’s more politics than policy,” Schwarz said.

Tax investment managers more

Lawmakers may effectively raise taxes on income earned by managers of hedge funds and private-equity funds.

Typically the managers are paid a portion of the profits earned by their funds, but they only need to pay capital gains tax on those profits. A proposal before the House would instead subject the profits to ordinary income tax rates, which are higher.

Mathias thinks the proposal might pass, but not before the mid-term elections in November. Schwarz thinks the issue will be debated but not necessarily passed this year. “It’s not a slam-dunk.”

Tax financial transactions

Bills in the House and Senate propose a new excise tax on financial firms for their securities transactions, such as in stocks, futures, swaps and options. If passed, it could be used to help fund deficit reduction and legislative efforts to create jobs.

“It’s very much on the table,” Schwarz said. But, he added, “I’d be surprised to see it pass this year.”

Temporarily extend all tax cuts

Between now and early February, when the president will present his 2011 budget proposal to Congress, there will be a lot of guessing as to just what tax proposals will be included.

On Wednesday, Congress Daily reported that the administration might seek a one- to two-year extension to the 2001 and 2003 tax cuts, set to expire on Dec. 31.

If that’s the case, it would be a switch from the administration’s earlier call to permanently extend the cuts for everyone except those making more than $200,000 ($250,000 for couples filing jointly).

Mathias doesn’t think extending the tax cuts temporarily for upper income households will fly.

As for everyone else’s tax cuts, a temporary extension is very likely since permanently extending them is a tough sell in a deficit-conscious environment. Over 10 years, it would cost roughly $2 trillion in forgone tax revenue.

But calling for a one- or two-year extension could make the proposition seem much less expensive than it really is. That’s because lawmakers may just decide to keep extending them temporarily, Mathias and Schwarz said. As proof, they point to the many “temporary” fixes for the Alternative Minimum Tax that Congress has passed over the years.

Bring in more Medicare tax

Lawmakers are considering ways to boost how much high-income people pay in Medicare tax to help pay for health reform.

In the Senate health bill, one provision would raise Medicare taxes on income over $200,000 ($250,000 for couples).

Currently, the Medicare payroll tax is 2.9% on all wages – with the worker and his employer each paying 1.45%. Under the Senate bill, these high-income workers would pay 2.35%.

In addition, they may expand the reach of the Medicare tax, which currently only applies to wages and salaries. Under consideration: subjecting unearned income such as dividends to the Medicare tax as well.

Tax profits earned offshore

Currently, a U.S.-based company doesn’t need to pay income tax on its foreign subsidiaries’ profits unless and until the money is brought back to U.S. shores.

One idea under consideration is to eliminate the deferral option so companies have to pay tax on their overseas profits even if the money stays offshore.

Another is to lower the corporate income tax rate for foreign earnings to entice companies to repatriate the money. That happened once before on a temporary basis. Going forward, Schwarz said, having another temporary incentive to repatriate could be tempting if lawmakers need to raise revenue over the short term.

Mathias believes some change to the repatriation rules could pass by the end of the year but not before the mid-term elections. Schwarz expects a debate could start this year but given everything else on Congress’ plate, he doesn’t think anything would pass in 2010.

House OK’s deductions for Haiti on ’09 taxes

By Hibah Yousuf, staff reporterJanuary 20, 2010: 3:35 PM ET
NEW YORK (CNNMoney.com) — The House unanimously approved a measure Wednesday that will allow taxpayers to deduct cash donations to Haiti earthquake relief on their 2009 tax returns instead of having to wait to file the claims next year.

Leaders of the House Ways and Means Committee from both parties introduced a bill Tuesday that makes contributions made between Jan. 12 and Feb. 28 count toward an individual’s or family’s 2009 taxes.

The bill also allows contributions made through text messages to be deducted if cell phone bills are provided as proof of donation.

Committee chairman Charles Rangel, D-N.Y., said in a statement that the committee “developed this legislation to make it easier, and encourage people, to donate to the relief efforts in Haiti.”

Leaders from the Senate Finance Committee introduced an identical version of the bill Wednesday afternoon. A floor vote is expected later in the day.

“This bill is a clear signal Americans want to help Haiti battle back from crisis,” committee chairman Max Baucus, D-Mont., said in a statement.

Similar legislation, which Baucus said was “successful,” was passed in 2005 to boost contributions in the aftermath of the Indian Ocean tsunami that occurred in late 2004

Haiti donations exceed $220 million

Typically, charitable contributions count toward the year in which they are made. The current measure would mean taxpayers don’t have to wait until next year to claim the benefit on their 2010 tax returns.

Factoring in the deduction: The Haiti relief contribution would count as an itemized charitable deduction. Itemized deductions are typically taken when an individual exceeds the standard deduction.

For 2009, the standard deduction for those 65 and under is $11,400 if married filing jointly or a qualifying widow, $8,350 if filing as a head of household, $5,700 if single and $5,700 if married filing separately.

If your adjusted gross income for 2009 tops $166,800 or $83,400 if married and filing separately, your charitable contribution is subject to the reduction of itemized contributions, usually 1%.

For cash contributions, the deducted ceiling is typically 50% of adjusted gross income, although in 2005, Congress passed legislation allowing 100% of income. 

Your 2009 Tax Organizer is here!

The Google Group Tax Deadlines & Forms is offering a complete professional tax organizer for your income taxes and you can download the pdf file at the link below:

http://groups.google.com/group/taxdeadlinesforms?hl=en

How Much Damage Did the Market Crash Do to Retirement Security?

from TaxVox: the Tax Policy Center blog by Howard Gleckman

The stock market collapse of 2007-2009 was the worst since the 1930s, and rivaled in modern times only by the crash of 1973-74. But the real question for those counting on equities to help fund their retirement security is: “What are my long-term prospects in the wake of the carnage?”

In a new paper, TPC’s Eric Toder, along with the Urban Institute’s Karen Smith and Barbara Butrica, look at how investors would fare under three post-crash market scenarios. And what they found may surprise you a bit. Under one, your portfolio gets back to where it would have been, absent the crash, by 2017. That would take large, but not unprecedented, stock gains over the next decade. If equities merely revert to their historic annual returns from the market’s December 2008 level, you’ll permanently remain far behind where you would have been if there had been no collapse. And if stocks respond as they did in the decade after the 1970s crash—well, you don’t want to know.

Now for the numbers. First, the researchers used the S&P 500 Index. Based on historical data, they assumed a real, inflation-adjusted, average growth rate in the index of 3.5 percent. Add in reinvested dividends and subtract 1 percent in administrative costs, and stock portfolios “normally” increase by 5.5 percent. You should also know they measured future returns from December 31, 2008, and not from the March, 2009 market bottom that was 27 percent lower.

If you had invested $100 in December, 2007 and the market hadn’t crashed, you’d have had $171 (in 2008 dollars) by 2017. The authors figure you still can get there, but it would take an implied average real annual growth rate of 9.4 percent in the index until 2017. That’s less than the 13 percent we saw in the 90s and the 12 percent from 1955 to 1964, but it is awfully robust.

If instead, the S&P index had simply resumed its historical 3.5 percent real growth rate after 2008 as if nothing had happened, you’d have just $100 in 2017—exactly where you started in December, 2007. But it could be worse. If we get a repeat of 1974-82, when the S&P grew at an average annual rate of minus 4 percent, your 2007 nest egg of $100 will turn into a whopping $60 by 2017. Ouch.

Aha, you say, all these scenarios are far too pessimistic. After all, the market has recovered about half of its losses since it bottomed last spring. But remember the 1930s. The market lost 86 percent of its value between 1930 and 1932, rebounded strongly until 1937 but crashed again. In the end, it took nearly three decades for the Dow to find its 1929 high. What matters to future retirees is the long-term trend, not a nine-month rebound.

Keep in mind that there will be big differences in how the crash affects individuals’ retirement prospects, depending on their age and income. Older people are likely to lose more because they had more invested before the crash and have less time to recover their losses before they retire. But younger people may benefit because they’ll have the chance to buy stocks at bargain prices. Because the wealthy are likely to own more stocks, they’ll lose more if the market does not bounce back, but gain more if it recovers. In contrast, low and middle-income individuals own few stocks and rely mostly on Social Security for their retirement. They are little affected by the market crash and most can recover their losses by working for an additional year.

There is, of course, no way to predict the future. But this paper will give you a sense of just how bad the last couple of years were for our retirement savings.

2010 Predictions from Wall Street and Main Street: Who’s Smarter?

Posted January 10, 2010 – 14:00 by Stacy Johnson in Investment

Is Wall Street any smarter than Main Street when it comes to predicting the direction of the stock market, housing and oil prices?

New Year’s Eve

It’s that time of year again: everybody who’s anybody sits in front of a camera and gives predictions on the year ahead. But just how smart are these “experts”? We do more than give them air time; we go back and see just how smart they are by comparing previous-year predictions with what actually happened.

Every December for the last five years Money Talks News has hooked up with David Wyss, the chief economist for giant research firm Standard & Poors. We sit him down in a studio and ask him what changes he expects for the coming year in three critical consumer categories: stocks, housing and oil.

But then we do something else: we go out, hit the streets and ask the same questions of the first three people we can find willing to talk to us on camera. The idea behind this little experiment is to see if the high-priced experts on Wall Street are really any smarter than a random stranger on the sidewalk. You might be surprised at the results. Watch the following 90-second story and see how Main Street compared to Wall Street with predictions for 2009 and who got it right. Then we’ll get to the predictions for 2010.

How Smart Were They? Predictions from 2009

The first (maybe not so) surprising thing we learned from that story is that when it came to predicting what would happen in 2009, random strangers on the sidewalk gave pretty much identical answers as one of the most experienced economists on Wall Street. And as far as accuracy? Both David Wyss and our people on the street did a decent job of predicting how the year would go for stocks, housing and oil prices, but none hit the nail on the head.

Consider this part of David Wyss’s comment on stocks:

We’re close to a bottom now, and I think we’ve probably hit the worse point already.

When he said that in mid-December of 2008, the Dow Jones Industrial Average was around 8,700, and that’s pretty much where it finished the year. But was it the worse point? Hardly. Several months after he made this prediction the Dow bottomed at 6,440 so it fell an additional 26%. From there it bounced back, however, to end the year at 10,428 for a calendar-year gain of about 19%. That makes his prediction of 10-15% gains look pretty good. But had he said not to invest at all until the market bottom in March, we could be up 62%.

Of course, nobody can accurately predict a market bottom no matter how smart they are. But it’s interesting to note that Wall Street predictions were no more clairvoyant than yours when it came to predicting the direction of stocks last year. Ditto for our other categories. Wyss’s predictions weren’t far off, but then neither were sidewalk amateurs. Oil was around $75/barrel when I got my predictions on tape in mid-December. It ended the year closer to $80, which makes Wall Street’s and Main Street’s prediction of $90 not that far off the mark. Ditto with housing: both professional and amateur guesses of a 10% decline were pretty close to the 8% drop we actually experienced. But 2009 is now behind us: what’s in store for this year? Here’s the story we shot in mid-December 2009 with predictions for 2010.

How Smart Are They? Predictions for 2010

This year Wall Street and Main Street gave different answers. Our Wall Street economist was much more optimistic. Wyss said stocks would rise 12%, and our woman on the street said down 10%. On oil, both Wall Street and Main Street are looking for an increase: Wall Street says $80 per barrel (about where it is right now) and Main Street says between $85 and $90. On housing, our expert was kind of vague, saying only that we might have a bit more decline ahead, but for the year we’d be up. Our more pessimistic man on the street said down another 10%.

We’ll be continuing our tradition by comparing predictions to reality at this time next year — stay tuned. But I’ll leave you with a tidbit of knowledge gained from 10 years as a stock broker, 20 as a money reporter, and 30 as an investor: The only thing accurately predictable is that our world is unpredictable. That’s why I keep some money in the market and some on the sidelines at all times. I own some oil stocks because they’re likely to go up if oil does, offsetting some of the pain of higher gas prices. I regard my home as simply the place where I live, not an investment. And I try to live like I’m going to die tomorrow, but invest like I’m going to live forever. I also keep my debt to a minimum. That’s why I just published Life or Debt 2010.

Taxpayer advocate to IRS: Don’t lien too heavily

By Jeanne Sahadi, senior writerJanuary 7, 2010: 7:47 AM ET

NEW YORK (CNNMoney.com) — The tax man has gotten a lot more aggressive in slapping liens on taxpayers who are seriously delinquent in their payments.

In fact, the Internal Revenue Service issued 475% more liens last year than it did in 1999.

But it hasn’t been doing so judiciously, which is causing unnecessary harm to some taxpayers and, ironically, to federal coffers, according to national taxpayer advocate Nina Olson.

“Taxpayers are being greatly harmed for very little benefit to the government,” Olson told CNNMoney.

Olson is a government official whose job is to highlight for Congress the most serious problems facing taxpayers. Lien issuance makes her top 5 list.

In her annual report to Congress, released on Wednesday, Olson says the IRS must do more to assess whether the benefits of a tax lien outweigh its harm to the taxpayer.

The IRS imposes a lien on a person’s property to ensure the government is first in line to be paid if a delinquent taxpayer sells or refinances property. The lien is issued when an agent determines a taxpayer can’t pay up.

But IRS agents only take into account a person’s income and expenses and not other debts and assets when sizing up his ability to pay, according to Olson. Then, the decision to issue the lien is typically not reviewed by higher-ups at the agency.

“Employees should look at all the facts and circumstances,” said Olson.

That’s because issuing a lien against someone who can’t pay and who doesn’t have any assets can create a “lose-lose” proposition for both the taxpayer and for the government, she noted in her report.

Here’s why: A lien slams a taxpayer’s credit score and can remain on a credit report anywhere from 10 years to 15 years or more, depending on the policy of the credit bureau.

That means it harms a person’s ability to get an affordable loan. And it can hurt his chances of getting a job or an insurance policy since employers and insurers often check credit history. So potentially his costs go up while his earning potential goes down along with his potential to be a source of tax revenue for Uncle Sam in the future.

Worst case scenario: It may mean the taxpayer ends up needing to tap Uncle Sam for cash.

“If the filing of a tax lien drives up a taxpayer’s costs and renders him or her unemployed or underemployed, the government may be forced to make outlays in the form of unemployment benefits, food stamps and the like,” Olson wrote.

To measure the effectiveness of liens in collecting revenue, Olson’s office tracked the cases of 270,000 taxpayers who first had a tax balance due in 2002 and on whom the IRS later put a tax lien.

One of the findings: Lien issuance doesn’t boost revenue collection.

Last year the IRS issued 966,000 liens, up from 168,000 in 1999. During the same decade, however, the money the agency collected in delinquent cases fell by 7.4% after adjusting for inflation.

Another finding from the study: In many cases where money is recovered, it’s not because of the lien.

More than 80% of the money the IRS collected was the result of of other measures – such as the withholding of a taxpayer’s refunds.

The IRS contested Olson’s finding. It said the study’s methodology – for instance, only considering payments that had been coded as a lien payment – “limits the ability to draw meaningful conclusions” since the study ended up excluding 56% of the payments made.

In addition, liens can spur taxpayers to pay up, the agency said.

“Taxpayer actions such as making installment payments, filing an offer in compromise or paying the liability in full may be motivated” by the filing of a lien or even the threat of one, the IRS said.

And it did not agree with a recommendation that employees get managerial approval for liens in cases where the taxpayer has no current assets.

The story isn’t over. Olson said she would continue to press her recommendations with the IRS. And key lawmakers are already weighing in.

“I worry that the IRS is reverting to some old habits to taxpayers’ detriment,” Sen. Charles Grassley, R-Iowa, said in a statement. “The IRS has to use its discretion to determine when liens are the best course to improve tax collection and when they are just a knee-jerk enforcement tactic that will do more harm than good.” 

Numerous Tax Provisions Expired at End of 2009

December 31, 2009

The ringing in of the new year at midnight on Dec. 31 also signaled the expiration of several tax provisions. The biggest was the estate and generation-skipping tax regime, which is repealed for 2010. Various bills have been introduced that would revive the estate tax in its 2009 form, but as of Jan. 1 no extension has been enacted, and the estate and generation-skipping taxes, at least temporarily,  no longer exist.

In addition, a number of temporary tax provisions, often referred to as “extenders,” have expired as of Jan. 1. They include tax credits, deductions and various tax incentives. Many of the provisions have been extended several times in the past, and a bill to extend them again is pending in Congress (HR 4213). It passed the House on Dec. 9, 2009, and has been referred to the Senate Finance Committee.

Estate and Generation-Skipping Taxes

In 2001, Congress enacted the Economic Growth and Tax Relief Reconciliation Act (EGTRRA), which resulted in the gradual repeal of the estate and generation-skipping transfer (GST) taxes over the next decade, resulting in no tax in 2010. However, under EGTRRA’s sunset provision, the repeal will be in effect for 2010 only. After that, the estate and GST regime in place before the passage of EGTRRA will spring back to life, as if EGTRRA had never been enacted. This means that in 2011 the estate tax exemption will be $1 million (adjusted for inflation), the tax rate will be 55%, and the state death tax credit will be revived.

EGTRRA also repealed for 2010 the step-up in basis for assets passing at death. Instead, inherited assets are subject to a modified carryover basis rule. Under this new rule, a recipient’s basis in property acquired from a decedent will be the lesser of the adjusted basis of the property at death or its fair market value on the date of death. The carryover basis provision is also scheduled to sunset after 2010.

A number of bills have been introduced that would restore the estate tax. In his budget proposal for fiscal 2010, President Obama proposed keeping the estate and GST tax rules in their 2009 form. The Taxpayer Certainty and Relief Act of 2009, S. 722, introduced in March, would make the estate tax permanent at a 45% top rate and would reunify it with the gift tax by restoring the unified credit at $3.5 million. It would also provide portability of the exemption between spouses. A similar bill, HR 4154, passed the House on Dec. 3.

Expired Tax Credits

The expired temporary tax credits include:

IRC § 30B alternative motor vehicle credit for hybrids weighing more than 8,500 pounds;

IRC § 40A credit for biodiesel and renewable diesel fuel;

IRC § 41 credit for research and experimentation;

IRC § 45A Indian employment tax credit;

IRC § 45D new markets tax credit;

IRC § 45G credit for certain railroad track expenditures;

IRC § 45N mine rescue team training credit;

IRC § 45P employer wage credit for active-duty members of the uniformed services;

IRC §§ 936 and 27(b) possession tax credit with respect to American Samoa;

IRC § 1397E credit for holders of qualified zone academy bonds; and

IRC § 1400C credit for first-time District of Columbia homebuyers.

Note that the possession tax credit with respect to American Samoa and the credit for holders of qualified zone academy bonds would not be extended by HR 4213.

Expired Deductions

The expired temporary deductions include:

IRC § 62(a)(2)(D) deduction for elementary and secondary schoolteachers;

IRC § 63(c)(1) additional standard deduction for state and local real property taxes;

IRC § 164 state and local sales tax deduction;

IRC § 165(h) deduction for personal casualty losses in federally declared disasters;

IRC § 168(e)(3)(E)(iv) 15-year straight-line cost recovery for qualified leasehold improvements;

IRC § 168(e)(3)(E)(v) 15-year straight-line cost recovery for qualified restaurant improvements;

IRC § 168(j) accelerated depreciation for property on Indian reservations;

IRC § 168(i)(15)(D) seven-year cost recovery period for motor sports entertainment complexes;

IRC § 168(n) expensing and special depreciation allowance for qualified disaster assistance property;

IRC § 170(b)(1)(E)(vi) contributions of capital gain real property made for conservation purposes;

IRC § 170(e)(3)(C)(iv)  enhanced deduction for contributions of food inventory;

IRC § 170(e)(3)(D)(iv)  enhanced deduction for contributions of book inventory to public schools;

IRC § 170(e)(6)(G) enhanced deduction for corporate contributions of computer equipment for educational purposes;

IRC § 179E(g) election to expense advanced mine safety equipment;

IRC § 181(f) expensing treatment for certain film and television productions;

IRC § 198(h) expensing of environmental remediation costs;

IRC § 199(d)(8) deduction for income attributable to domestic production activities in Puerto Rico; and

IRC § 222 deduction for tuition and related expenses.

Other Provisions

Other expired provisions include:

IRC § 172(j) carryback of net operating losses attributable to federally declared disasters;

IRC § 408(d)(8) allowance for tax-free distributions from individual retirement plans for charitable purposes;

IRC § 613A(c) suspension of limitation on percentage depletion for oil and gas from marginal wells;

IRC § 871(k) treatment of regulated investment company dividends and assets;

IRC § 897(h) qualified investment entity treatment of regulated investment companies under the Foreign Investment in Real Property Tax Act of 1980;

IRC §§ 953(e) and 954(h) exceptions for active financing income;

IRC § 954(c) look-through treatment of payments between related controlled foreign corporations;

IRC § 2105(d) look-through of certain regulated investment company stock in determining gross estate of nonresidents;

IRC § 1367(a) basis adjustment to stock of S corporations making charitable contributions of property;

IRC § 1391 empowerment zone designations;

IRC §§ 1400, 1400A and 1400B District of Columbia Enterprise Zone incentives;

IRC § 1400E renewal community tax incentives;

IRC § 1400L(b) New York Liberty Zone bonus depreciation and 1400L(d) tax-exempt bond financing;

IRC § 1400N Gulf Opportunity Zone rehabilitation credit; and

IRC § 7652(f) “cover over” of tax on distilled spirits to Puerto Rico and the U.S. Virgin Islands.

Will the beginning of a new decade bring an end to the Great Stagnation?:

from Economist’s View by Mark Thoma

The Big Zero, by Paul Krugman, Commentary, NY Times: Maybe we knew, at some unconscious, instinctive level, that it would be an era best forgotten. Whatever the reason, we got through the first decade of the new millennium without ever agreeing on what to call it. The aughts? The naughties? Whatever. …

But from an economic point of view, I’d suggest that we call the decade past the Big Zero. It was a decade in which nothing good happened, and none of the optimistic things we were supposed to believe turned out to be true.

It was a decade with basically zero job creation…, private-sector employment has actually declined — the first decade on record in which that happened.

It was a decade with zero economic gains for the typical family. Actually, even at the height of the alleged “Bush boom,” in 2007, median household income adjusted for inflation was lower than it had been in 1999. And you know what happened next.

It was a decade of zero gains for homeowners…: right now housing prices, adjusted for inflation, are roughly back to where they were at the beginning of the decade. … Almost a quarter of all mortgages … are underwater, with owners owing more than their houses are worth.

Last and least for most Americans — but a big deal for retirement accounts, not to mention the talking heads on financial TV — it was a decade of zero gains for stocks, even without taking inflation into account. Remember the excitement when the Dow first topped 10,000…? Well, that was back in 1999. Last week the market closed at 10,520.

So there was a whole lot of nothing going on in measures of economic progress or success. Funny how that happened.

For as the decade began, there was an overwhelming sense of economic triumphalism in America’s business and political establishments, a belief that we — more than anyone else in the world — knew what we were doing. …

Let me quote from a speech that Lawrence Summers, then deputy Treasury secretary…, gave in 1999. … [quote] … Mr. Summers — and … just about everyone in a policy-making position at the time — believed … America has honest corporate accounting; this lets investors make good decisions, and also forces management to behave responsibly; and the result is a stable, well-functioning financial system.

What percentage of all this turned out to be true? Zero.

What was truly impressive about the decade past, however, was our unwillingness, as a nation, to learn from our mistakes.

Even as the dot-com bubble deflated, credulous bankers and investors began inflating a new bubble in housing. Even after famous, admired companies like Enron and WorldCom were revealed to have been Potemkin corporations with facades built out of creative accounting, analysts and investors believed banks’ claims about their own financial strength and bought into the hype about investments they didn’t understand. Even after triggering a global economic collapse, and having to be rescued at taxpayers’ expense, bankers wasted no time going right back to the culture of giant bonuses and excessive leverage.

Then there are the politicians. Even now, it’s hard to get Democrats, President Obama included, to deliver a full-throated critique of the practices that got us into the mess we’re in. And as for the Republicans: now that their policies of tax cuts and deregulation have led us into an economic quagmire, their prescription for recovery is — tax cuts and deregulation.

So let’s bid a not at all fond farewell to the Big Zero — the decade in which we achieved nothing and learned nothing. Will the next decade be better? Stay tuned. Oh, and happy New Year.