Key Takeaways
- OBBBA Opportunity Zones.
- Number of itemizers estimated under OBBBA.
- Changes to gambling deductions.
- International retaliatory taxes.
- "Crypto Week" in Washington.
- National Lottery Day!
One Big Beautiful Bill Act
GOP Reshapes Opportunity Zones to Target Trump Country - Richard Rubin and Ruth Simon, Wall Street Journal:
The first wave of Opportunity Zone investments sent tens of billions of dollars into urban areas, accelerating development in low-income neighborhoods already on the cusp of growth.
For Opportunity Zones 2.0, Republicans reshaped the program to aid rural America, testing whether bigger tax breaks can bring investment to areas largely left behind by a program for left-behind areas.
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The extension and changes should reduce federal revenue by $41 billion through 2034, according to the Joint Committee on Taxation. The biggest visible shift is the rural emphasis. Starting in 2027, after governors designate new zones, capital gains placed into rural investments and held for five years can receive a 30% tax discount, triple the benefit elsewhere. Rural projects will qualify for incentives with lower thresholds for investments in existing structures.
For Opportunity Zones 2.0, Republicans reshaped the program to aid rural America, testing whether bigger tax breaks can bring investment to areas largely left behind by a program for left-behind areas.
...
The extension and changes should reduce federal revenue by $41 billion through 2034, according to the Joint Committee on Taxation. The biggest visible shift is the rural emphasis. Starting in 2027, after governors designate new zones, capital gains placed into rural investments and held for five years can receive a 30% tax discount, triple the benefit elsewhere. Rural projects will qualify for incentives with lower thresholds for investments in existing structures.
T25-0243 – Impact of the 2025 Reconciliation Act on the Number of Itemizers, 2025-35 Calendar Years - Tax Policy Center:
TPC estimates that another 5 million taxpayers will itemize deductions in 2025 under the 2025 reconciliation act known as the One Big Beautiful Bill Act (OBBBA). The increase results largely from the temporary $40,000 limit on state and local tax (SALT) deductions effective as of 2025. Overall, about 23 million taxpayers are expected to itemize in 2025 or roughly 12 percent of all tax units.
Between 2026 and 2029, that share of itemizers will grow to about 14 percent in 2029 (or roughly 27 million itemizers). After 2029, the share of itemizers will drop to around 11 percent, primarily because the increase in the SALT limit will expire and return to $10,000 (not indexed for inflation).
Between 2026 and 2029, that share of itemizers will grow to about 14 percent in 2029 (or roughly 27 million itemizers). After 2029, the share of itemizers will drop to around 11 percent, primarily because the increase in the SALT limit will expire and return to $10,000 (not indexed for inflation).
Republican Tax Bill Is a Losing Deal for Gamblers - Alan Rappeport, New York Times:
Gambling losses were traditionally fully deductible, so gamblers who broke even in a year would not owe any taxes. But under the new tax law losses are only 90 percent deductible, meaning that if a gambler won $100,000 and then lost $100,000, he could still owe tax on $10,000 of income.
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Many Republicans have said they were not even aware how the tax change got into the bill, and this week Democrats from Nevada tried without success to belatedly reverse it.
“If you’re asking me how it got in there, no I don’t know,” Senator Charles E. Grassley, an Iowa Republican who sits on the Finance Committee, told reporters last week.
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Many Republicans have said they were not even aware how the tax change got into the bill, and this week Democrats from Nevada tried without success to belatedly reverse it.
“If you’re asking me how it got in there, no I don’t know,” Senator Charles E. Grassley, an Iowa Republican who sits on the Finance Committee, told reporters last week.
International
Tax News & Views International Weekly: Retaliatory Tools - Alex Parker, Eide Bailly:
Many multinational businesses breathed a sigh of relief when proposed Sec. 899 was taken out of the One Big Beautiful Bill Act—following the announcement of an agreement between the United States and Group of 7 nations on the 15% global minimum tax.
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But while that largely removed the possibility of new retaliatory taxes over the global minimum tax, also known as Pillar Two, it’s not entirely gone. So far, none of the parties have released any further details about the “joint understanding,” which for now seems more like a high-level handshake agreement than a formal truce. There are still many questions about how this understanding could work in practice.
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But while that largely removed the possibility of new retaliatory taxes over the global minimum tax, also known as Pillar Two, it’s not entirely gone. So far, none of the parties have released any further details about the “joint understanding,” which for now seems more like a high-level handshake agreement than a formal truce. There are still many questions about how this understanding could work in practice.
Trump Tariffs Threaten to Offset Much of the “Big Beautiful Bill” Tax Cuts - Erica York and Alex Durante, Tax Policy Blog:
If the tariffs in effect today are left in place permanently, they would reduce long-run GDP by 0.5 percent before retaliation, while raising about $2.1 trillion in revenue from 2025 through 2034 on a conventional basis. If the reciprocal tariffs and the Section 232 copper tariff take effect August 1 as scheduled, they would reduce GDP by an additional 0.3 percent while raising $401 billion in additional revenue (a relatively small increase as imports would fall substantially under those rates). In total, before accounting for retaliation, the tariffs imposed and threatened would reduce long-run GDP by 0.8 percent, raising about $1.7 trillion in revenue from 2025 through 2034 measured on a dynamic basis, accounting for slower economic growth.
Related: Eide Bailly International Tax Services.
This week on Capitol Hill - Digital Assets
House Taxwriters Shift Focus to Digital Asset Tax Treatment - Cady Stanton, Tax Notes ($):
House Republicans declared the week of July 14 “Crypto Week,” with a focus on passing legislation on the chamber floor — including the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act (S. 1582), aimed at regulating stablecoins, and the Digital Asset Market Clarity (CLARITY) Act of 2025 (H.R. 3633), which would set the rules for when a digital asset is considered a security or a commodity.
Ohio Republican plans to lead comprehensive tax overhaul for crypto - Benjamin Guggenheim, Politico:
Miller, a freshman on the chamber’s tax writing committee, said his legislative proposal could be introduced in the coming weeks. It would establish a de minimis standard that would exempt small crypto transactions from taxes. The bill would also clarify the tax implications for common crypto activities like mining, which provides rewards to crypto users who solve mathematical problems to validate transactions on digital ledgers, known as blockchains.
The bill would clarify the taxation of staking, which involves crypto users pledging their digital assets to help validate transactions, and could modernize “wash sale rules” that prevent investors from taking short-term losses on crypto to wipe out their tax liabilities. Miller also said he wants to improve the treatment of digital assets in qualified retirement plans, loans and charitable contributions.
The bill would clarify the taxation of staking, which involves crypto users pledging their digital assets to help validate transactions, and could modernize “wash sale rules” that prevent investors from taking short-term losses on crypto to wipe out their tax liabilities. Miller also said he wants to improve the treatment of digital assets in qualified retirement plans, loans and charitable contributions.
IRS addresses withholding on uncashed retirement plan payments
IRS Addresses Uncashed Retirement Plan Distributions - Tax Analysts, Tax Notes ($):
The IRS has issued guidance (Rev. Rul. 2025-15) on withholding and reporting regarding uncashed retirement plan distribution checks and subsequently issued checks.
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The IRS ruled that no adjustment or refund is available under sections 6413 and 6414 for the amounts withheld and remitted regarding the first check. The IRS also determined that if the amount of the individual’s accrued benefit under the plan at the time of issuance of the second check is less than or equal to the amount of the first check, no federal income tax withholding obligations apply regarding the second check. Moreover, if the amount of the individual’s accrued benefit at the time of issuance of the second check is greater than the amount of the first check, the excess amount is subject to withholding in accordance with section 3405.
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The IRS ruled that no adjustment or refund is available under sections 6413 and 6414 for the amounts withheld and remitted regarding the first check. The IRS also determined that if the amount of the individual’s accrued benefit under the plan at the time of issuance of the second check is less than or equal to the amount of the first check, no federal income tax withholding obligations apply regarding the second check. Moreover, if the amount of the individual’s accrued benefit at the time of issuance of the second check is greater than the amount of the first check, the excess amount is subject to withholding in accordance with section 3405.
The Revenue Ruling.
Blogs and Bits
Tax pros should watch out for phishing emails and other attacks, Security Summit warns - IRS:
For tax professionals who are victims of any of these schemes or identity theft, the IRS urges them to quickly contact their IRS Stakeholder Liaison to provide details of the situation. Tax professionals can also share information with the appropriate state tax agency by visiting the Federation of Tax Administrators Report a Data Breach page.
Deciding whether to convert your hobby to a business - Kay Bell, Don't Mess with Taxes:
There are, however, your answers to some general questions could help you make the hobby-to-business decision. They include —
- Do you intend to make a profit?
- If the activity makes a profit, how much is it?
- Can you expect to make a future profit from the appreciation of the assets used in the activity?
- Do you depend on income from the activity for your livelihood?
- Are any losses due to circumstances beyond your control or are the losses normal for the startup phase of your type of business?
- Do you adjust operations to improve profitability?
- Do you carry out the activity like a business, keeping complete and accurate books and records?
- Do you and your advisors have the knowledge needed to carry out the activity as a successful business?
- Do you intend to make a profit?
- If the activity makes a profit, how much is it?
- Can you expect to make a future profit from the appreciation of the assets used in the activity?
- Do you depend on income from the activity for your livelihood?
- Are any losses due to circumstances beyond your control or are the losses normal for the startup phase of your type of business?
- Do you adjust operations to improve profitability?
- Do you carry out the activity like a business, keeping complete and accurate books and records?
- Do you and your advisors have the knowledge needed to carry out the activity as a successful business?
In the Courts
A Critical Review of Veribest Vesta, LLC v. Commissioner of Internal Revenue: Implications for Conservation Easement Valuations - Ed Zollars, Current Federal Tax Developments:
This situation underscores the Tax Court’s increasing scrutiny of conservation easement cases and its willingness to apply stringent penalties, including those that extend beyond the taxpayer to their professional advisors, when valuations are found to be baseless or arguments are deemed frivolous. The ongoing consideration of sanctions against counsel serves as a stark warning to tax professionals about the importance of thorough due diligence, realistic valuations, and well-reasoned legal positions in such matters.
Tax Trouble
What day is it?
It's National Lottery Day!