WHY IT’S GOOD TO BE GRATEFUL

On February 23, 2018, The Wall Street Journal published an article, “How to Raise More Grateful Children.” The subtitle for the article stated: “A sense of entitlement is a big problem among young people today, but it’s possible to teach gratitude.” This last idea is what I hope to do with my clients.

WHY IT’S GOOD TO BE GRATEFUL

On February 23, 2018, The Wall Street Journal published an article, “How to Raise More Grateful Children.” The subtitle for the article stated: “A sense of entitlement is a big problem among young people today, but it’s possible to teach gratitude.” This last idea is what I hope to do with my clients.

Much of what I’ve learned about Gratitude has come from personal experience. When I look back, every personal crisis I’ve had has ultimately led me to Gratitude. Whether it’s a serious, life threatening illness for me, my wife, or loved ones; a major setback in business; or a natural disaster like Hurricane Sandy, I now see the positives in those events and feel more grateful for what I‘ve learned from them. I’ve learned that adversity can be a great teacher, if you pay attention to the lessons, but, it wasn’t always that way.

Like most people, I grew up complaining about the way things were and resenting those who I viewed as “lucky” because they were born into families with monetary wealth. Now, I view it as a blessing that I had to work hard for everything I now have. I’ve learned to be grateful that I chose the career that I have and that I can help so many people with the knowledge and experience I’ve gained. I’ve learned to appreciate the material wealth that I have, modest as it is, and to be content making an honest living and serving others.

I’ve also learned a lot about Gratitude from my coach, Lee Brower, at Strategic Coach. Like myself, he and members of his family have had health issues, but we have all learned to appreciate and not take good health for granted. Through Lee’s teachings on Gratitude, I have learned the value of having family members who get along and care about each other; as well as, the value of friendship and being part of a community where I feel like I belong. Most of all, Lee and members of his firm, Empowered Wealth, have emphasized that Gratitude is a lifestyle. A practice that starts with self-respect and respect for others, grows into appreciation for the many blessings we all have, and inspires the spirit of generosity that gives fulfillment and meaning to the way we live our lives.

Charles Sarowitz, CPA/PFS

Acknowledging the good that you already have in your life is the foundation for all abundance.

                                                                               Eckhart Tolle

TAXES AND GRATITUDE?

You probably never thought you would see these two words paired together.  Let me share my perspective on how this unique combination arises.

TAXES AND GRATITUDE?

You probably never thought you would see these two words paired together.  Let me share my perspective on how this unique combination arises.

During this time of year, many clients come into my office upset about taxes and expressing concerns about how the upcoming changes in the tax code will impact them, their interests, their finances, and their legacies.  Many people are willing to go to extraordinary lengths to avoid taxes and let their fear of the unchartered waters of the new tax polices keep them from leaving port.  And while my professional career largely incorporates minimizing the amount of taxes my clients owe, in an effort to maximize the amount of money they can have, now and in the future, I have learned to recognize that there are more important things to focus on than simply tax minimization.

I advise them to consider “What's more important to you than money?”  I wonder, would they:

• Sacrifice their health for more money?  Health is vital to one’s happiness and well-being, yet too many of us are allowing stress and overworking to ruin our health.
• Compromise their closest relationships for more money?  Too many people put their quest for more money above their connection to their family and friends.
• In order of importance, value having money higher than their moral, ethical, or spiritual beliefs? I've seen people of great wealth live empty lives and suffer at the end of life.

Wouldn't you rather have the satisfaction of living a good, honest life – a life of simple joys and pleasures, a life of health and well-being, a life of close relationships – than only having more money?

In the course of my career, I have come to realize and believe that there is much more to “true wealth” than just accumulating money and minimizing taxes.  In my experience, the key to “true wealth” is the practice of gratitude.  Gratitude leads us all to a happier, fulfilled, and more meaningful life.

Charles Sarowitz, CPA/PFS

Gratitude is a currency that we can mint for ourselves, and spend without fear of bankruptcy.

                                                                  Fred De Witt Van Amb

THE STORY OF THE GRATITUDE ROCK

How I started practicing Gratitude

My coach and mentor, Lee Brower, is well-known as a thought leader on Gratitude.  He’s been featured on television, in articles, and in the movie, “The Secret,” on the topic of Gratitude. But Lee, by his own admission, wasn’t always a grateful person.  In fact, one of the defining moments of his life started out as one of his most ungrateful moments.

THE STORY OF THE GRATITUDE ROCK

How I started practicing Gratitude

My coach and mentor, Lee Brower, is well-known as a thought leader on Gratitude.  He’s been featured on television, in articles, and in the movie, “The Secret,” on the topic of Gratitude. But Lee, by his own admission, wasn’t always a grateful person.  In fact, one of the defining moments of his life started out as one of his most ungrateful moments.

It happened more than two decades ago.  Lee was at the apex of his rise as a successful estate planner in Salt Lake City, Utah.  He was both a leader in his church and a respected member of his local business community. Yet, he had a personal challenge within his family: His teenage daughter developed a substance abuse problem.  Lee initially saw her problem as a personal and family embarrassment.  He wondered how something like this could happen to him and thought that other people must be judging him negatively.

But one day, while walking on the beach, he picked up a rock that, to his eye, had the image of a butterfly embedded in it.  Suddenly he felt differently because, coincidentally, his daughter’s nickname was “Mariposa,” meaning “butterfly” in Spanish.  He saw it as the hand of God speaking to him, reminding him of how precious his daughter is to him.  Ever since then, he carries that rock in his pocket as a daily reminder that he should be grateful for the blessings in his life.

Inspired by Lee’s story, I’ve done my best to do the same, to be grateful for the good fortune I have and to help others realize that we’re all so much better off than we perceive from moment to moment.  My wish for you is that it doesn’t take a personal crisis for you to experience the difference that Gratitude can make in your life.

ABOUT THIS LETTER

This is no ordinary letter to clients or newsletter briefing.  When I had a recent health scare, it was Gratitude for the many blessings in my life (and, really, all of our lives) that got me through the tough time I went through.  Now, I want to help you, and all of our clients, to live happier, more-fulfilled, and more meaningful lives. To me, there’s no better way to start than through practicing and living Gratitude daily.  Please enjoy and share this message if it inspires you as well.

Charles Sarowitz, CPA/PFS

The Financial Crimes Enforcement Network (FinCEN) has announced that the mandatory beneficial ownership information (BOI) reporting requirement under the Corporate Transparency Act (CTA) is back in effect. Because reporting companies may need additional time to comply with their BOI reporting obligations, FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies.

The Financial Crimes Enforcement Network (FinCEN) has announced that the mandatory beneficial ownership information (BOI) reporting requirement under the Corporate Transparency Act (CTA) is back in effect. Because reporting companies may need additional time to comply with their BOI reporting obligations, FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies.

FinCEN's announcement is based on the decision by the U.S. District Court for the Eastern District of Texas (Tyler Division) to stay its prior nationwide injunction order against the reporting requirement (Smith v. U.S. Department of the Treasury, DC Tex., 6:24-cv-00336, Feb. 17, 2025). This district court stayed its prior order, pending appeal, in light of the U.S. Supreme Court’s recent order to stay the nationwide injunction against the reporting requirement that had been ordered by a different federal district court in Texas (McHenry v. Texas Top Cop Shop, Inc., SCt, No. 24A653, Jan. 23, 2025).

Given this latest district court decision, the regulations implementing the BOI reporting requirements of the CTA are no longer stayed.

Updated Reporting Deadlines

Subject to any applicable court orders, BOI reporting is now mandatory, but FinCEN is providing additional time for companies to report:

• For most reporting companies, the extended deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025. FinCEN expects to provide an update before that date of any further modification of the deadline, recognizing that reporting companies may need additional time to comply.
• Reporting companies that were previously given a reporting deadline later than March 21, 2025, must file their initial BOI report by that later deadline. For example, if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it should follow the April deadline, not the March deadline.

Plaintiffs in National Small Business United v. Yellen, DC Ala., No. 5:22-cv-01448, are not required to report their beneficial ownership information to FinCEN at this time.

FinCEN Notice FIN-2025-CTA1

The IRS has issued Notice 2025-15, providing guidance on an alternative method for furnishing health coverage statements under Code Secs. 6055 and 6056. This method allows insurers and applicable large employers (ALEs) to comply with their reporting obligations by posting an online notice rather than automatically furnishing statements to individuals.

The IRS has issued Notice 2025-15, providing guidance on an alternative method for furnishing health coverage statements under Code Secs. 6055 and 6056. This method allows insurers and applicable large employers (ALEs) to comply with their reporting obligations by posting an online notice rather than automatically furnishing statements to individuals.

Under Code Sec. 6055, entities providing minimum essential coverage must report coverage details to the IRS and furnish statements to responsible individuals. Similarly, Code Sec. 6056 requires ALEs, generally those with 50 or more full-time employees, to report health insurance information for those employees. The Paperwork Burden Reduction Act amended these sections to introduce an alternative furnishing method, effective for statements related to returns for calendar years after 2023.

Instead of automatically providing statements, reporting entities may post a clear and conspicuous notice on their websites, informing individuals that they may request a copy of their statement. The notice must be posted by the original furnishing deadline, including any automatic 30-day extension, and must remain accessible through October 15 of the following year. If a responsible individual or full-time employee requests a statement, the reporting entity must furnish it within 30 days of the request or by January 31 of the following year, whichever is later.

For statements related to the 2024 calendar year, the notice must be posted by March 3, 2025. Statements may be furnished electronically if permitted under Reg. § 1.6055-2 for minimum essential coverage providers and Reg. § 301.6056-2 for ALEs.

This alternative method applies regardless of whether the individual shared responsibility payment under Code Sec. 5000A is zero. The guidance clarifies that this method applies to statements required under both Code Sec. 6055 and Code Sec. 6056. Reg. § 1.6055-1(g)(4)(ii)(B) sets forth the requirements for the alternative manner of furnishing statements under Code Sec. 6055, while the same framework applies to Code Sec. 6056 with relevant terminology adjustments. Form 1095-B, used for reporting minimum essential coverage, and Form 1095-C, used by ALEs to report health insurance offers, may be provided under this alternative method.

Notice 2025-15

The IRS has issued the luxury car depreciation limits for business vehicles placed in service in 2025 and the lease inclusion amounts for business vehicles first leased in 2025.

The IRS has issued the luxury car depreciation limits for business vehicles placed in service in 2025 and the lease inclusion amounts for business vehicles first leased in 2025.

Luxury Passenger Car Depreciation Caps

The luxury car depreciation caps for a passenger car placed in service in 2025 limit annual depreciation deductions to:

• $12,200 for the first year without bonus depreciation
• $20,200 for the first year with bonus depreciation
• $19,600 for the second year
• $11,800 for the third year
• $7,060 for the fourth through sixth year

Depreciation Caps for SUVs, Trucks and Vans

The luxury car depreciation caps for a sport utility vehicle, truck, or van placed in service in 2025 are:

• $12,200 for the first year without bonus depreciation
• $20,200 for the first year with bonus depreciation
• $19,600 for the second year
• $11,800 for the third year
• $7,060 for the fourth through sixth year

Excess Depreciation on Luxury Vehicles

If depreciation exceeds the annual cap, the excess depreciation is deducted beginning in the year after the vehicle’s regular depreciation period ends.

The annual cap for this excess depreciation is:

• $7,060 for passenger cars and
• $7,060 for SUVS, trucks, and vans.

Lease Inclusion Amounts for Cars, SUVs, Trucks and Vans

If a vehicle is first leased in 2025, a taxpayer must add a lease inclusion amount to gross income in each year of the lease if its fair market value at the time of the lease is more than:

• $62,000 for a passenger car, or
• $62,000 for an SUV, truck or van.

The 2025 lease inclusion tables provide the lease inclusion amounts for each year of the lease.

The lease inclusion amount results in a permanent reduction in the taxpayer’s deduction for the lease payments.

Rev. Proc. 2025-16

The leadership of the Senate Finance Committee have issued a discussion draft of bipartisan legislative proposals to make administrative and procedural improvements to the Internal Revenue Service.

A limited liability company (LLC) classified as a TEFRA partnership could not claim a charitable contribution deduction for a conservation easement because the easement deed failed to comply with the perpetuity requirements under Code Sec. 170(h)(5)(A) and Reg. § 1.170A-14(g)(6). The Tax Court determined that the language of the deed did not satisfy statutory requirements, rendering the claimed deduction invalid.

A limited liability company (LLC) classified as a TEFRA partnership could not claim a charitable contribution deduction for a conservation easement because the easement deed failed to comply with the perpetuity requirements under Code Sec. 170(h)(5)(A) and Reg. § 1.170A-14(g)(6). The Tax Court determined that the language of the deed did not satisfy statutory requirements, rendering the claimed deduction invalid.

Easement Valuation

The taxpayer asserted that the highest and best use of the property was as a commercial mining site, supporting a valuation significantly higher than its purchase price. However, the Court concluded that the record did not support this assertion. The Court found that the proposed mining use was not financially feasible or maximally productive. The IRS’s expert relied on comparable sales data, while the taxpayer’s valuation method was based on a discounted cash-flow analysis, which the Court found speculative and not supported by market data.

Penalties

The taxpayer contended that the IRS did not comply with supervisory approval process under Code Sec. 6751(b) prior to imposing penalties. However, the Court found that the concerned IRS revenue agent duly obtained prior supervisory approval and the IRS satisfied the procedural requirements under Code Sec. 6751(b). Because the valuation of the easement reported on the taxpayer’s return exceeded 200 percent of the Court-determined value, the misstatement was deemed "gross" under Code Sec. 6662(h)(2)(A)(i). Accordingly, the Court upheld accuracy-related penalties under Code Sec. 6662 for gross valuation misstatement, substantial understatement, and negligence.

Green Valley Investors, LLC, TC Memo. 2025-15, Dec. 62,617(M)

The Tax Court ruled that IRS Appeals Officers and Team Managers were not "Officers of the United States." Therefore, they did not need to be appointed under the Appointments Clause.

The Tax Court ruled that IRS Appeals Officers and Team Managers were not "Officers of the United States." Therefore, they did not need to be appointed under the Appointments Clause.

The taxpayer filed income taxes for tax years 2012 (TY) through TY 2017, but he did not pay tax. During a Collection Due Process (CDP) hearing, the taxpayer raised constitutional arguments that IRS Appeals and associated employees serve in violation of the Appointments Clause and the constitutional separation of powers.

No Significant Authority

The court noted that IRS Appeals officers do not wield significant authority. For instance, the officers do not have authority to examine witnesses, unlike Tax Court Special Trial Judges (STJs) and SEC Administrative Law Judges (ALJs). The Appeals officers also lack the power to issue, serve, and enforce summonses through the IRS’s general power to examine books and witnesses.

The court found no reason to deviate from earlier judgments in Tucker v. Commissioner (Tucker I), 135 T.C. 114, Dec. 58,279); and Tucker v. Commissioner (Tucker II), CA-DC, 676 F.3d 1129, 2012-1 ustc ¶50,312). Both judgments emphasized the court’s observations in the current case. In Buckley v. Valeo, 424 U.S. 1 (per curiam), the Supreme Court similarly held that Federal Election Commission (FEC) commissioners were not appointed in accordance with the Appointments Clause, and thus none of them were permitted to exercise "significant authority."

The taxpayer lacked standing to challenge the appointment of the IRS Appeals Chief, and said officers under the Appointments Clause, and the removal of the Chief under the separation of powers doctrine.

IRC Chief of Appeals

The taxpayer failed to prove that the Chief’s tenure affected his hearing and prejudiced him in some way, under standards in United States v. Smith, 962 F.3d 755 (4th Cir. 2020) and United States v. Castillo, 772 F. App’x 11 (3d Cir. 2019). The Chief did not participate in the taxpayer's CDP hearing, and so the Chief did not injure the taxpayer. The taxpayer's injury was not fairly traceable to the appointment (or lack thereof) of the Chief, and the Chief was too distant from the case for any court order pointed to him to redress the taxpayer's harm.

C.C. Tooke III, 164 TC No. 2, Dec. 62,610