Accounting
IRS proposes rules for stock buyback tax
The Internal Revenue Service and the Treasury Department issued proposed rules Tuesday for the stock buyback tax for large corporations.
The two Notices of Proposed Rulemaking involve the stock buyback or “repurchase” excise tax that was included in the Inflation Reduction Act of 2022 in an effort to require large corporations to pay more taxes.
“President Biden’s Inflation Reduction Act helps ensure that large corporations pay their fair share, just as American families do,” said Treasury Secretary Janet Yellen in a statement. “This proposed rule is a key part of the Biden administration’s efforts to improve tax fairness and reduce the deficit by closing loopholes and ensuring wealthy individuals, large corporations, and complex partnerships pay taxes owed.”
Andrew Harrer/Bloomberg
The proposed regulations aim to provide more clarity to taxpayers and tax professionals on how to correctly calculate and pay the new stock buyback excise tax on corporate stock buybacks, in accordance with the framework of
The stock buyback excise tax applies at a rate of one percent of the fair market value of any stock of a covered corporation that is repurchased by the corporation during its taxable year, minus the aggregate FMV of stock issued by the taxpayer during that year. The statute generally defines a “covered corporation” as a domestic corporation whose stock is publicly traded on an established securities market. An established securities market for this purpose includes U.S. national securities exchanges, certain foreign securities exchanges, regional or local exchanges, and certain interdealer quotation systems. “Repurchases” (or buybacks) include a corporation’s acquisition of any of its stock from a shareholder for property that qualifies as a redemption of the stock as defined in the tax code.
The Inflation Reduction Act also says a “repurchase” (buyback) includes any other transaction that the Treasury secretary determines in regulations or other guidance to be “economically similar” to a redemption of stock. They include buybacks of corporate stock that occur in connection with certain corporate mergers, separations and other M&A transactions. A “repurchase” can also include acquisitions of the company’s stock by some specified affiliates.
The proposed regs also include a targeted anti-abuse rule aimed at foreign-parented multinational corporations to require them to pay a share of the stock buyback excise tax, without the routine intercompany funding transactions among corporate affiliates being inadvertently subject to the new rule.
The proposed regulations pertain to publicly traded domestic corporations that repurchase their stock or whose stock is acquired by certain affiliates. The regulations also would affect certain publicly traded foreign corporations that repurchase their stock or whose stock is acquired by certain affiliates.
The regulations would implement the statutory netting rule that reduces the aggregate fair market value of stock repurchased by a taxpayer during a taxable year by the aggregate fair market value of stock issued by the taxpayer during the taxable year. The regulations would implement the statutory “de minimis” exception which provides that a taxpayer is not subject to the stock repurchase excise tax with respect to a taxable year if the aggregate fair market value of the stock repurchased by the taxpayer during the tax year does not exceed $1,000,000.
The proposed regulations say the stock repurchase excise tax must be reported on the
As previewed last year in
Written comments on the proposed regulations need to be submitted by the following dates:
DSB Rock Island merges with fellow Minnesota firm Meuwissen, Flygare, Kadrlik and Associates; Smith + Howard adds Richmond-based consultancy Fahrenheit Advisors; Reynolds, Bone & Griesbeck adds fellow Memphis firm Scott and Pohlman; and GBQ expands its credit union practice with Lillie & Co.
AI-specialized accounting platform company
“We’re putting every dollar back into the platform and team – to invest in ML research, to continue to bring the most cutting-edge AI to accounting firms, and to open additional slots for firms,” said Matt Harpe, Basis co-founder, in an email.
Basis, which emerged from stealth
“This technology is a new paradigm for accounting. Learning to work with your computer, not just on it, might be an even bigger shift than going from paper to digital. Over the last year, as accountants have experienced what’s possible with the most cutting-edge AI, we’ve seen more and more firms decide that AI must become the top strategic priority. We’re excited to continue to equip firms with AI that actually works,” said Mitch Troyanovsky, Basis co-founder in an email.
Basis sells exclusively to accountants versus selling directly to businesses or building ‘new’ accounting firms, and is tailored specifically for use by expert accountants. Basis focuses on building agents that understand, and can operate on, accounting broadly instead of isolating only a specific task. This allows Basis to work across clients and workflows without losing context, and to quickly take on new workflows, said Basis. Accountants onboard Basis to engagements and assign it core workflows for one-time or ongoing execution
“Accounting is a massive industry, and Basis is clearly leading on the AI side. This is one of the few AI agents that’s already deployed and working. Matt and Mitch have put together the best NYC team in the applied AI space,” said Vinod Khosla, founder of Khosla Ventures, who also co-founded Sun Microsystems.
Platform Accounting Group has added two more accounting firms, based in Indiana and Illinois, bringing the total firms that have joined the Utah-based company this year to 12.
Platform Accounting Group, founded in 2015, invests in and acquires small accounting firms, and announced it
Midwest Advisors, formerly known as Philip+Rae & Associates, is headquartered in Naperville, Illinois, and has provided fractional CFO roles, controllership and back-office accounting operations for more than 30 years. Additionally, the firm offers tax preparation, accounting and auditing, financial planning, estate planning, payroll services, small business consulting, bookkeeping, back-office accounting, small business consulting and more.
In operation for 30 years, Indianapolis-based Crossroads Advisors, formerly Peachin Schwartz + Weingardt, serves high-net-worth individuals, closely-held businesses and not-for-profit organizations. The firm supports clients throughout their life cycle, from the startup phase to mature businesses seeking an exit or succession strategy.
“Because of my experience and time there, I deeply value the tight-knit community and small-town feel of the Midwest,” said Reyes Florez, CEO of Platform Accounting Group, in a statement. “We are thrilled these firms, who like us, prioritize relationships and roots, are joining our group and will be able to invest even further in their clients and communities.”
Platform Accounting Group has nearly 1,000 employees across 12 states and expects to add a few more accounting firms in January, the company said.
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