Broker Check

 April 30, 2018

New York Adds Passenger Tax on Taxis and Ubers 

          New York’s struggling taxi and livery industry just got dealt a new blow with the state budget imposing an additional fee of $2.50 to $2.75 in order to pay for improvements to mass transit.

Any drop in ridership would bring thousands of drivers to the brink of bankruptcy.

This plan was a compromise instead of charging a fee on all cars entering the area of Manhattan below 96th street of $11.52.

          Yellow taxis will be required to charge an additional $2.50 while livery cars, black cars and ride hauling services like Lyft and Uber will bill $2.75.  Riders in shared trips such as Uber-pool will be charged an additional 75 cents per passenger.

          45,000 yellow taxi, livery and black car drivers have been overwhelmed by an influx of ride hailing drivers who number about 70,000.  Driver revenue is falling and taxi medallions which give drivers the right to pick up street hails have plummeted from a value of over $1 million to as little as $201,000.  

This will be just another cost to make your night on the town a little bit more expensive.  Wall Street Journal 4/2/18 p. A10A

Limits Placed on Employer Operated Eating Facility

          Holiday parties are still fully deductible.  Employee meals on business travel remain 50% deductible.  But limits are now placed on Employee Operated Eating Facilities such as a cafeteria.  Whereas companies used to be able to deduct the entire expense, the write off is now subject to a 50% hit.  After 2025, the cost will be disallowed in full.  The same rules apply to meals an employer brings on site for employee meeting and other on-premises meals that are provided for the convenience of the employer.

Look for companies to be less generous in their menu offerings.  Kiplinger Tax Letter 3/23/18.

Entertainment Expenses Are No Longer Deductible

          Before 2018 these could be taken as write-off for 50% of the business related entertainment costs of a meeting.  Tax reform simplified matters by axing the break starting with 2018 returns.  No more writing off show tickets, golf course fees, sporting events and the like even if taking clients or your tax preparer.  Kiplinger Tax Letter 3/23/18.

DOL Fiduciary Rule Invalid

          The 5th Circuit Court of Appeals ruled that the rule requiring IRA and 401(k) paid advisors such as brokers and insurance agents to act in the best interest of their clients was unconstitutional and beyond the DOL’s authority.  You can bet this is not the last word and that the Securities and Exchange Commission which does have the authority will act. 

          The ruling does not affect us as we do not act in the capacity as a broker for IRAs and 401(k)s but rather as Registered Investment Advisors where we are required to act in the best interest of our clients.  Kiplinger Tax Letter 3/23/18.

Real Estate Pros Can Beat Passive Loss Rules

          and deduct rental losses if they spend over 50% of their working hours and more than 750 hours a year materially participating in real estate as a broker, landlord, builder or the like and Can Prove It.  Franco TC Summary Opinion 2018-9.

          However, we just finished an audit of a real estate professional who was able to prove it but the IRS Agent and her manager in a New Jersey office blatantly disregarded the law and the facts.  We ultimately prevailed in IRS Appeals.  The problem was compounded by the fact that the IRS Agent and her manager’s position constituted harassment of a taxpayer and caused needless fees to be paid to us in order to uphold the law for our client (even though we did get the agent reprimanded by the Internal Affairs Division of the IRS). 

If You Get a Random email from IRS Concerning a Tax Refund …….

          Delete it.  It is a scam, warns the IRS.  The email tricks people into opening a link saying that incorrect information was deleted on their tax refund account.  The link goes to a fake page where scammers try to steal your personal information.

The IRS does not randomly contact taxpayers by phone or email.

As always, if you have any questions about these or any other matters, do not hesitate to call us.