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A comment on I.R.S. Warns States Not to Circumvent State and Local Tax Cap.

Re:I.R.S. Warns States Not to Circumvent State and Local Tax... by gnicholas on Wednesday May 23, 2018 @10:41PM (#17140614)
TLDR: the tax reform bill put a cap on deducting state and local taxes, which were previously fully deductible. Now you can only deduct $10k between property tax and state income taxes.

Residents of CA, NY, NJ, etc. easily hit these limits, so some of these states are giving residents other ways to effectively pay their state/local taxes while maintaining full deductibility for federal tax purposes.

Now the IRS is trying to fight back against these rules. But the IRS will have a difficult time drawing distinctions between the existing allowed deductions and the novel deductions they are trying to exclude.

As a (former) tax lawyer, I agree that this is an uphill battle for the IRS. If the states do a good job of creating alternatives to state income taxes, the IRS will have a very tough time defeating them in court.

It's interesting to see the Republican administration attempting to close these "loopholes" and heavily-Democrat states arguing in favor of said "loopholes". Quite a role-reversal!

Edit: clarified language in last paragraph

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Re:I.R.S. Warns States Not to Circumvent State and Local Tax... by ngoldbaum on Wednesday May 23, 2018 @10:59PM (#17140717)
Capping the state and local tax deduction isn’t closing a loophole. It’s punishing blue states for funding social services and state government via state taxes.
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Re:I.R.S. Warns States Not to Circumvent State and Local Tax... by gnicholas on Wednesday May 23, 2018 @11:00PM (#17140731)
You’re right. The “loopholes” that people are discussing are the novel workarounds to get around the cap.

When I said “enforce” loopholes I meant they are trying to defeat them.

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Re:I.R.S. Warns States Not to Circumvent State and Local Tax... by MrMorden on Wednesday May 23, 2018 @11:11PM (#17140782)
The "role-reversal" is only surprising if you had believed that the parties have actual principles.
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