Terry Oraha wrote:I'm not sure i understand how the elective nature of the tax undermines 162 or 164.
All good points. The woman who spoke is brilliant, and I think I am not fully remembering her reasoning. I agree that the point might be moot because right now what we have is an IRS notice saying that these laws work to create a deductible tax. What I think is interesting is that the IRS has not yet issued proposed regulations. And once they do, they will have to go through comment and response.
Why wouldn't the tax be deductible in the year that it is related to if the taxpayer is accrual?
How can the tax possibly be deductible if it is in exchange for a credit on the individual's tax return? An enormous portion of Subchapter K is about sorting out transactions between the partner and the partnership that don't have economic reality or are designed solely to avoid certain tax ramifications.
The IRS approved a strategy, and some of us believe that doing so was political, to subvert "Trump's tax law", and now the IRS is in the position of having to issue Regs that provide guidance when there are over 20 states with slightly different versions of this strategy. What a mess.