The White House proposed a new minimum tax on taxpayers worth more than $100M as part of its annual budget. This would be a minimum tax of 20% on income and the rise in value of assets annually.
Similar to the Alternative Minimum Tax, it would only affect those taxpayers paying less than 20% in federal taxes annually. This would be a huge change in the income tax system, because it would tax the appreciation of unsold assets as well.
In most instances it would require taxpayers to perform annual valuations and appraisals on illiquid assets, attacking the very heart of most of the wealth that’s been built in this country over the past several decades.
Why the new administration would propose this sort of tax after similar provisions in the Build Back Better Bill were shot down, is beyond imagination. They’ve already been down this road, and lost. Why would they squander what political capital they have left on another quixotic failure?
And if by some wild hallucination it did pass, how would it be enforced?
Let’s say that this tax applied to you, and your wealth is made up of regular income from your business, as well as increases in the value of your real estate and your businesses. In order to determine the appreciation of your real estate holdings we would need to do an appraisal. There’s only one problem. When you hire ten different appraisers, you get ten different answers.
We’d have the same problem with your businesses, only it would be worse. When you hire ten different valuation specialists, you normally get twenty different answers.
By definition, we’d be talking about an impossibly difficult system of laws to enforce. We’ll see if anything happens on this one.
Let me leave you with this.
I will begin doing extensions for C Corps, Partnership, and Personal Income Tax Returns on April 2nd. If your return hasn’t been completed by then, it will be automatically extended.
As you know from prior columns, the extension only extends the due date of the return. It doesn’t extend the due date of any payment that might be due.
You may make income tax deposits at the following web addresses.
IRS.gov/payments
Mytax.Illinois.gov
If you’d rather make those payments with the extension we’ll be filing for you, please contact our offices today.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
www.AccountingSolutionsLtd.com
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.