Tax News & Views Mac and Cheese Tariff Roundup

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Investors Get New Breaks on Capital-Gains Taxes in Trump Law - Richard Rubin, Wall Street Journal:

While Trump-era Republicans have cut taxes on wages, business income, corporations and estates, they have left the top capital-gains rate exactly where it sat on Jan. 1, 2013: 23.8%. Behind that stasis, however, Congress continued shrinking the capital-gains tax base.

In the tax-and-spending legislation that Trump signed into law July 4, Republicans reupped the Opportunity Zone tax break for investments in low-income areas and made it permanent, letting investors defer and reduce taxes. They also expanded a break often used by venture-capital investors that can wipe out capital-gains taxes when a startup is sold.

Tax bill also delivered huge education changes - Laura Meckler and Danielle Douglas-Gabriel, Washington Post:

School voucher programs have spread through conservative states, but the provision enacted last week is the first federal version. Under the new law, which takes effect in 2027, taxpayers who make donations to state voucher programs will get 100 percent of their money back when they file their federal taxes.

This means the tax break for donating to voucher programs will dwarf tax incentives for donating to any other charity, and backers hope it will provide Americans with a powerful incentive for parents seeking alternatives to the public schools. Under the provision, a tax credit may be claimed for donations to state organizations that grant scholarships — also called vouchers — to help students pay private school tuition.

Tariff Weekend

Trump threatens 35 percent tariffs on Canada in latest trade war twist - David J. Lynch, Amanda Coletta, and Frances Vinall, Washington Post via MSN:

President Donald Trump threatened on Thursday to impose a 35 percent tariff starting Aug. 1 on more than half of Canada’s exports to the United States in the latest jolt to the on-again, off-again trade talks between the North American neighbors.

In a letter posted on his social media site Truth Social, Trump blended complaints about Canadian trade practices and what he said was Ottawa’s failure to prevent illicit cross-border shipments to the U.S. of fentanyl, a highly addictive drug. The president left open the possibility of “an adjustment” to his tariff plans, if Canada stepped up efforts to police the border.

Trump Threatens 30% Tariffs on EU, Mexico - Gavin Bade, Kim Mackrael and Santiago Pérez, Wall Street Journal:

The U.S. will charge a 30% tariff on goods from the European Union and Mexico effective Aug. 1, President Trump said in letters to the leaders of each trading partner, posted on Truth Social on Saturday morning.

The letters are the latest missives in Trump’s global trade wars, upping the ante in intensive negotiations aimed at lowering the tariffs before the first of next month.

Trump has made U.S. trade deficits a focus of the letters. He said he would consider lowering the tariffs if the EU offers “complete, open Market Access to the United States, with no Tariff being charged to us,” and if Mexico does more to combat drug cartels, which he said are trying to turn “all of North America into a Narco-Trafficking Playground.”

Trump Says 200% Pharma Tariffs Are Coming. Wall Street Shrugs. David Wainer, Wall Street Journal. "The upshot: with more time to prepare and a friendlier tax environment, pharma companies may barely feel the sting of tariffs."

US Tariffs Revenue Climbs to Fresh Record for Single Fiscal Year - Jarrell Dillard and Daniel Flatley, Bloomberg. "The Treasury Department recorded $27 billion in customs-duties revenue for June, bringing fiscal year-to-date inflows from levies to $113 billion, according the agency’s monthly budget statement. Total government revenue for the month increased about 13% from a year ago."

Manufacturers plead for US tariff clarity before copper stockpiles dwindle - Kana Inagaki, Leslie Hook and Zehra Munir, Financial Times:

Global manufacturing executives are begging for clarity on Donald Trump’s tariff policy before a 50 per cent levy is imposed on copper imports, as their stockpiles diminish and the clock ticks on existing contracts.

...

The US relies heavily on imports of the metal, which accounted for about 53 per cent of its copper demand in 2024, according to Morgan Stanley.

The article adds: "The arbitrage between US prices and those elsewhere has only blown out to about 28 per cent, suggesting the market does not fully believe the 50 per cent tariffs will come into force."

Tariffs or Deals? Trump Seems Content With Punishing Levies. - Ana Swanson, New York Times:

Even after President Trump announced sweeping global tariffs in April, some investors and supporters comforted themselves by arguing that the president’s goal was still to open global markets, not close them off.

The belief, promoted by Mr. Trump himself, was that he was using his tariffs as a lever to crack open commercial opportunities and the administration would soon deliver dozens of deals that would increase U.S. exports and help American businesses flourish abroad.

Three months later, that optimism is being replaced by doubts that Mr. Trump’s goal was ever to strike the kind of trade deals that would open up markets.

Tax Administration

IRS Opens Path for Churches to Test Political Speech Limits - Erin Schilling and Tristan Navera, Bloomberg ($):

The IRS’s green light for churches to speak about political campaigns and candidates without losing their tax-exempt status opens the door to new legal tests of two of the strongest Constitutional protections: Free speech and religious liberty.

Churches that want to push the bounds of political speech now have more assurance that they won’t lose their tax-exempt status, which allows them to largely avoid taxes and for donors to receive tax deductions. They also may test how far they can endorse a politician without attracting IRS enforcement.

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The IRS and religious groups said in a proposed consent decree July 7 that the agency is reinterpreting a 1954 provision to now allow churches to speak on political views with their congregation. The so-called Johnson Amendment has long prohibited churches and other 501c(3) nonprofits from engaging in political activities if they want to keep their tax-exempt status.

Capitol Hill Recap: The OBBBA Implementation Battle Begins - Alex Parker, Eide Bailly:

President Trump signed an executive order Monday promising to “build upon and strengthen the repeal of, and modifications to, wind, solar, and other ‘green’ energy tax credits in” the new tax law, and vowing to “strictly enforce” the repeal and accelerated phase-outs of credits enacted by the 2022 Inflation Reduction Act.

The OBBBA repealed outright credits for electric vehicles, and scaled back many others, while also creating new requirements against funding or assistance from “foreign entities of concern” that could be difficult for many taxpayers to follow. It wasn’t a complete repeal of the IRA, but it went further than some of the defenders of the credits, even Republicans, were hoping for.

Trump’s Order Creates Uncertainty for Clean Energy Tax Credits - Katie Lobosco, Tax Notes ($):

President Trump’s recent executive order has the clean energy industry awaiting Treasury Department guidance about how wind and solar projects can qualify for a tax credit based on what it means to “begin construction.”

Generally, the One Big Beautiful Bill Act (P.L. 119-21) repeals or phases out many of the clean energy tax credits that were created by the Inflation Reduction Act. But in a last-minute change secured by moderate Senate Republicans, wind and solar projects seeking to use section 45Y production credits or section 48E investment credits got a temporary reprieve.

The new law requires wind and solar projects to be placed in service by the end of 2027 to qualify for the credits — but they get an exemption if they start construction within 12 months of the law’s enactment and finish the facility in four years.

State Tax Tidbits

State Tax News & Views: Brief Overview of the One Big Beautiful Bill; Mid-Year Cases & Trends & OK Decides that Native Americans owe income tax - Melissa Menter and Colette Sutton, Eide Bailly. "Many businesses may assume that 100% of their taxable income is subject to their home state’s tax if they have no employees or property located outside the state. But this may not always be the case. If you are making sales to out of state customers, some states may allow you to apportion income, even if your connection to other states is limited."

Oklahoma Org Advises CPAs on Stroble's Tribal Tax Implications - Emily Hollingsworth, Tax Notes ($):

The case study, released July 8 by the Oklahoma Society of CPAs (OSCPA), examines the Oklahoma Supreme Court’s July 1 ruling in Stroble v. Oklahoma Tax Commission, in which the court affirmed the tax commission's denial of income tax exemptions claimed by an enrolled member of the Muscogee (Creek) Nation.

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The case study urges CPAs to exercise caution with claims based on the McGirt ruling in light of Stroble . “The decision signals that Oklahoma courts are not inclined to expand McGirt into areas like taxation without clear federal direction,” it said.

Blogs and Bits

IRS provides tax relief to Texas flood victims; questions remain on pre- and post-disaster actions - Kay Bell, Don't Mess With Taxes:

The IRS has announced tax relief for Texas taxpayers impacted by the Independence Day adjacent severe storms, straight-line winds, and flooding that began pummeling the region on July 2.

They now have a Feb. 2, 2026, deadline for various tax matters.

The new deadline applies to individuals and households residing or having a business in Burnet, Kendall, Kerr, Kimble, Menard, San Saba, Tom Green, Travis, and Williamson counties.

In-Depth: OBBBA Key Tax Provisions Affecting Individuals and Businesses - Parker Tax Pro Library. "In addition to making permanent most of the TCJA changes that were scheduled to sunset at the end of the year, OBBBA also includes a new $40,000 SALT cap and a wide array of new and enhanced tax breaks."

OB3 Act: State and Local Tax Deductions - Thomas Gorczynski, Tom Talks Taxes. "Despite attempts in prior versions of the law, the final OB3 Act did not have a provision targeting the multitude of pass-through entity tax (PTET) systems established in response to Notice 2020-75."

More On The Tips And Overtime Deductions In One Big Beautiful Bill - Peter Reilly, Forbes. "First of all, the benefits are only about income tax, not Social Security and Medicare as the 'no tax' monikers might imply. Further, the final bill puts limits and phaseouts in place. And the benefits are structured as deductions."

Cutting the IRS Enforcement Budget Is A Disservice To Taxpayers - Janet Holtzblatt, TaxVox. "When enforcement funding is cut, taxpayers potentially lose an important service provided by the IRS: the chance to gain clarity and, in some cases, certainty about what the tax code means for them before they file a tax return riddled with unintentional errors."

Trust Not

Defendant Concealed Over $5M in Income Using an Illegal Tax Shelter - US Department of Justice (Defendant name omitted, emphasis added):

A Colorado dentist was sentenced yesterday to 41 months in prison for tax evasion related to his use of an illegal tax shelter.

The following is according to court documents and statements made in court: since 2014, Defendant owned and operated a dental practice in Fort Collins, Colorado. In 2016, Defendant purchased an abusive-trust tax shelter for $50,000. The tax shelter involved concealing income and creating false tax deductions through the use of a so-called business trust, family trust, charitable trust and a private family foundation, all of which Defendant created and controlled. From 2016 through 2023, Defendant used this tax shelter to conceal from the IRS over $5 million in income he earned from his dental practice and evade more than $1.6 million in federal and state income taxes owed on that income.

No word on whether the $50,000 trust came with a money-back guarantee.

To set up the tax shelter, Defendant signed trust instruments that named him as trustee of the three trusts and foundation, and he opened bank accounts in the name of each entity. He further recruited friends to falsely sign his trust instruments as the purported creators of the trusts to make it seem as if Defendant himself was not the real creator. Defendant then transferred majority ownership of his dental practice to his business trust. He did this despite having been warned by attorneys and CPAs that, in Colorado, a trust could not own a dental practice.

Why listen to actual professionals, anyway? They're just afraid to be aggressive. They're just wannabe IRS agents.

Defendant then transferred over $5 million in income he earned from his dental practice into the bank accounts of the various trusts and foundation to create the illusion that the funds belonged to those entities, not him. In reality, Defendant retained complete control over those funds and used the funds to pay for personal expenses including his home mortgage, credit card bills, boats, and professional baseball season tickets.

In Colorado, I would guess these were Rockies tickets. That's serious punishment right there.

Defendant also filed false tax returns for himself, his dental practice, the trusts, and his foundation that falsely reported the income he earned from his dental practice as income of the trusts. On those tax returns, Defendant also claimed fraudulent deductions for his personal living expenses which he disguised as trust expenses and charitable donations.

Once a client asked me why he couldn't use a fancy trust setup to avoid taxes like the big players do. Like in this case, it seems to work for a little while, until suddenly it doesn't work at all.

What day is it?

In France, it's Bastille Day. In the U.S.A, it's National Mac and Cheese Day. Choose carefully.

Tax News & Views Mac and Cheese Tariff Roundup

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Joe B. Kristan, CPA