COVID-19 and Tax Effects on Real Estate

David Stewart:   0:01
Welcome to the podcast. I'm David Stewart, editor in chief of Tax Notes Today International. This week: the CARES Act and real estate. The Coronavirus Aid, Relief, and Economic Security Act was enacted in large part to provide Americans with economic relief during the coronavirus pandemic. But it's also had some unexpected results for the real estate market. Joining me from his home in Virginia is Tax Notes legal reporter Eric Yauch. Eric, welcome back to the podcast.

Eric Yauch:   0:30
Thanks for having me, Dave.

David Stewart:   0:31
Can you tell me about your guests and the interview you just did?

Eric Yauch:   0:34
Sure. My guest was Kate Kraus. Kate is a partner at Allen Matkins in Los Angeles and she is a CLE chair for the American Bar Association Tax Section's Real Estate Committee. Fun fact about Kate: prior to becoming a tax lawyer, she earned a PhD from Princeton in the foundations of quantum mechanics. We focused on changes under the CARES Act and recent IRS guidance that affects real estate.

David Stewart:   0:54
All right. Let's go that interview.

Eric Yauch:   0:56
Kate, thanks for being here today.

Kate Kraus:   0:58
Hey. Thanks, Eric. Great to be here.

Eric Yauch:   0:59
So before we jump into some of the changes that affect real estate, I think a little background will be helpful to kind of set the stage for what we're going to talk about. So for decades, the IRS struggled with auditing partnerships, and that stems from the fact that partnerships, for the most part, aren't taxpayers. Partners pay the tax. So when the IRS audits a corporation, it audits the entity and that entity filed a tax return and paid tax previously. It's not the case for partnerships, though. While they file an annual information return, the items are reported to partners, and they take those into account on their returns. After decades of struggling with this, Congress enacted the centralized audit regime in the Bipartisan Budget Act of 2015, and that allows the IRS to audit partnerships and issue assessments at the entity level.  

Eric Yauch:   1:37
Although it was created in 2015, it wasn't effective until the 2018 tax year. Now we could spend eight hours on the nuances of the BBA, that's not the focus today. However, one portion of the BBA is a major issue for the topics we will cover today. Under the BBA, partnerships can't simply file amended returns and make changes to prior years. Instead, they have to file an administrative adjustment request, or AAR. Now the AAR concept isn't entirely new, although it is different under the BBA. Now fast forward to the end of 2017 when the Tax Cuts and Jobs Act is enacted and overhauled the tax code. Fast forward even further to now: we're in the midst of a global pandemic and Congress and Treasury are rushing to change the tax code so businesses and individuals can get their hands on some much-needed cash. One hurdle on that process is the AAR. Kate, what is an AAR and how does it differ from filing an amended tax return?

Kate Kraus:   2:23
Thanks, Eric. So this gets to a general problem with the BBA, and that is it's very hard to get a refund. And this is something I think most people weren't expecting when this legislation was enacted. Normally, if a person pays too much tax for a tax year, they can get a refund, and there might be procedural rules they have to follow. But if they follow all the rules, they should be able to get their money back if they paid too much.  

Kate Kraus:   2:51
And that's the approach that we had under TEFRA as well before the BBA. If a partnership reported too much income or misallocated income, so a partner reported too much income on a tax return and paid too much tax, that partner was able to get a refund. Then along comes the BBA, which made many significant changes and one of the most significant is that it's incredibly difficult to get a refund at all. And really, the easiest way to think about it is the only way to get a refund is if the IRS makes an adjustment to your previously filed return, and the partnership avails itself of the emitted return modification rule under section 6225(b)(2).  

Kate Kraus:   3:32
That's really the only way that you can be confident that a partner will get a refund. So a partner cannot be confident that it will get its money back if it paid too much tax even under the pull-in method. That's somewhat better in some ways than the amended return modification and a refund is generally not available if it's the partnership that's requesting the adjustment. So the way that the partnership requests an adjustment under the BBA is not by filing an amended return, it's by filing what's called an administrative adjustment request, which is the AAR that people are talking about.  

Kate Kraus:   4:05
So let's say a partnership reported too much income in 2018 and now it wants to go back and adjust that previously filed return. It does that by filing an AAR. And the partners will not get a refund of the tax they were paid in 2018. Instead, they effectively get a nonrefundable tax credit for the year that the adjustment is requested. So if the AAR is filed in 2020, the partners will effectively get a nonrefundable tax credit that they can use in 2020. And as we all know, a lot of taxpayers are going to be in a locked position for 2020, so they may not owe any tax for their 2020 income anyway, because they have no net income, and that tax credit then is pretty much useless.

Eric Yauch:   4:48
So one question on that: If they get the benefit in the year that they file it in 2020, does that mean that they wouldn't get any benefit until possibly 2021 when they file their 2020 tax return?

Kate Kraus:   4:57
That's right. That's when the benefit would happen if they get any benefit. So, to run through that with a simple example and make this more concrete, let's say the partnership allocated $100 million too much income to me because I'm fantastically wealthy and make great investments. And so I had too much income allocated to me in 2018 and I paid $37 million too much tax for 2018. And now that partnership realizes the error of its ways, and so it wants to correct its 2018 return. So if it files an AAR in 2020, I would go back and recalculate the amount of tax I should have paid for 2018. And I would say, "Ah, crap. I paid $37 million too much tax." But instead of just getting a straight out refund of that money, I reduced my 2020 tax liability by $37 million. And so that means that that affects me when I'm paying my taxes for 2020.  

Kate Kraus:   5:53
So that means that I don't get cash right now. And it also means that if I have net losses for 2020 because I'm a restaurant owner or in retail or some other industry that's significantly impacted by COVID-19, my 2020 tax liability is zero anyway. And I'm not going to get any benefit from a $37 million tax credit for 2020 and I can't carry that forward to another year or back to an earlier year. I just lose it.  

Kate Kraus:   6:21
One point I want to add that I have been receiving questions on is there's an example in the regulations under section 6227 that might look like you can get a refund with an administrative adjustment request. But that example is actually addressing something else. So what that example is talking about is say in the first few months of 2020, things are going really well. So, I paid $1 million of estimated tax because I thought I was going to have an amazing year. And it turns out that actually my tax liability for 2020 is zero, so I don't owe any tax. So I should be able to get that $1 million of estimated tax payment back for 2020.  

Kate Kraus:   7:00
So under normal rules, I can get that back. And if I'm this partner in the partnership that made this error in 2018, that doesn't change anything. I should still be able to get that $1 million that I overpaid for 2020. I can get that back and I can get a refund of that amount. But I don't get the $37 million back that I paid for 2018.

Eric Yauch:   7:20
Thanks for the background on the AAR, Kate. Now that we know what an AAR is and why it matters for partnerships looking to amend returns, let's turn to some of the CARES Act changes where this all comes together.  

Eric Yauch:   7:30
So by way of background, the TCJA increased the deduction for bonus appreciation to 100 percent for assets with the recovery period of 20 years or less. Another change was a reduction of several improvement property classes into just qualified improvement property, QIP. However, in that process, lawmakers forgot to give QIP a 15-year life and made bonus appreciation unavailable because it had a 39-year life or 40-year alternative depreciation system. In that process, some property that used to have a 15-year life now had a 39-year life. This is referred to as the retail glitch.

Eric Yauch:   8:00
But the CARES Act changed that. So now QIP does qualify for bonus retroactively. Now, something else to add is business interest expense under the TCJA was generally limited to interest income and 30 percent of adjusted taxable income. Real estate businesses can opt out of those limits, but they had to depreciate property using the ADS timeframes.  

Eric Yauch:   8:18
So before the CARES Act, the taxpayer made a real property election, but had to use ADS or QIP, so it would use a 40-year life, which wasn't much worse than the 39-year life it otherwise would have had. With the CARES Act fix, taxpayers have a choice between bonus depreciation of QIP, effectively a one-year life and no real property election, or you can use a 20-year ADS life and choose the real property election and opt out of section 163(j). So Kate, does the BBA play a role in deciding which changes to make now?

Kate Kraus:   8:43
Yeah, the BBA makes this calculation more complicated. And another complication is that if a business wants to make this real property trade or business election, their section 163 j), so that it can avoid that limitation on its interest deduction, that election is irrevocable. So you make it in one year, and then it lasts forever.  

Kate Kraus:   9:06
So a lot of businesses were looking at the tax code in 2018 and maybe 2019 if they already filed their 2019 tax return, and really the tradeoff may not have been very difficult. Do they go with the 39-year life or the 40-year life for their qualified improvement property? That's not a big cost to go to a 40-year life if the benefit is they can avoid the deduction for the interest limitation.  

Kate Kraus:   9:31
So a lot of businesses made real property trade or business election on their 2018 return and that's irrevocable. So with the CARES Act now, the whole purpose of these amendments to qualified improvement property provisions is so that taxpayers could get bonus depreciation for 2018 and 2019. And in order to do that, taxpayers might need to revoke their irrevocable election under section 163(j) and the IRS has helped in that respect. And under Rev. Proc. 2020-22, it's now possible to revoke an irrevocable election under section 163(j), so that's very helpful.  

Kate Kraus:   10:11
And then the BBA part of this is, OK, so now you can go to your 2018 return and report bonus depreciation, or maybe a 15-year life for your qualified improvement property, but that's not going to generate cash now. Because as we discussed, as AAR, you don't get cash now. Instead, you reduce your tax liability for the tax year in which the AAR  is filed, so that might benefit you in say April 2021. And then the next problem is you don't get a refund of the tax that you've overpaid. Instead, you just get to reduce your tax liability for 2020. So you might not get any benefit at all from that bonus depreciation that you're now entitled to.  

Kate Kraus:   10:54
And then, to make matters worse, it's not totally clear how attributes are adjusted under the BBA, and it looks like the partnership's basis in its asset would reflect the bonus depreciation that's reported on an AAR. So if a partnership acquired qualified improvement property in 2018 and paid $10 million for it and it did not claim bonus depreciation on it because the tax code didn't allow that at the time the return was filed. But now it goes back and wants to file on an AAR reporting the bonus depreciation, it can do that and file the AAR. And it looks like the partnership's basis in the property would then be reduced to zero as of 2018, which means that not only do you lose any benefit from the bonus depreciation in 2018, but you never get to get any depreciation deductions for that property in any year.  

Kate Kraus:   11:47
And you might have a corresponding reduction to your outside basis in your partnership interest, so you would be effectively losing $10 million of basis, without  receiving any tax benefit ever. So a partnership might file an AAR to take advantage of the favorable adjustment and it might actually make everyone worse off forever. And it's not just the timing thing. It's really a permanent harm to the partner's position.

Eric Yauch:   12:13
I was just about to say -- so it sounds like the IRS issued some guidance that may sort of alleviate that problem.

Kate Kraus:   12:18
Right. So it's still possible if a partnership wants to take advantage of the new CARES Act provision and to revoke its election under section 163(j) to make a real property trade or business election. It's still allowed to do that by filing an AAR. Most partnerships will probably not want to do that.  

Kate Kraus:   12:34
And under the new guidance from the IRS, namely revenue procedure 2020-23 it's possible for the partnership to amend its return, and it's believed that that's supposed to allow the partners to get a refund. But it's very important that the requirements of that revenue procedure are satisfied because if you don't satisfy them, you will not get that benefit. And then you might end up back in the AAR situation.

Eric Yauch:   13:00
Thanks for that, Kate. So taxpayers also received some relief related to like-kind exchanges under section 1031 and notice 2020-23. And it sounds like while taxpayers generally kind of welcomed that notice, there's a bit of confusion around what the relief actually does. And with section 1031, timing is everything. So Kate, could you walk us through the notice and some of the issues that have popped up in light of it?

Kate Kraus:   13:21
Sure. So generally, if you're doing a like-kind exchange, you have a 45-day identification period and a 180-day exchange period. And the one thing that's clear under this notice, this is notice 2020-23, if either of those deadlines would occur on or after April 1, that's now extended until July 15. So that's the part that's clear.  

Kate Kraus:   13:44
The part that's unclear is whether or not you have a minimum 120-day extension for these periods as well pursuant to section 17 of revenue procedure 2018-58. It looks like you probably don't get that. I believe that the more conservative approach we might be getting more guidance and more clarity from the government on this soon, which will resolve the question.  

Kate Kraus:   14:09
And then it is also possible that there's a mandatory 60-day extension under new section 7508A(d) that was enacted at the end of 2019 and it looks like that probably is not available either at present. But hopefully future guidance will clarify this.

Eric Yauch:   14:28
One thing I want to ask you is that it seems like it's not clear if the extensions are elective or mandatory. And can you kind of talk about why that would matter?

Kate Kraus:   14:35
Sure. So I have some clients who sold property, and the cash is now sitting with a qualified intermediary. And they had already identified replacement property and this replacement property was leased out to maybe a restaurant or maybe a WeWork-type business. The tenant is no longer paying rent on this building. Moreover, the client realized that they actually would like to make it via taxable transaction and get their hands on the cash that's sitting with a QI. Liquidity is a major concern right now, so they don't want to acquire the replacement property anyway because it's no longer a good investment. And it's really important for them to get as much cash as they can in the short term right now. So they would like to get their cash back from this qualified intermediary, and they're running into these restrictions that apply to avoid issues that's constructive receipt. And so the problem is, they're not allowed to get the cash back from the qualified intermediary until the exchange period ends. So this is what's counterintuitive.  

Kate Kraus:   15:38
You might think by extending the exchange period, you're doing a favor for a client or for the taxpayers because it gives them a longer period to do something. But here it looks like the extension could actually hurt taxpayers because it extends the period that the cash has to stay with qualified intermediary and not be given to the taxpayer. But if the extension is elective, then the taxpayer would be able to get their cash back at the end of the 180-day exchange period, and they wouldn't have to wait until July 15. So I know that various groups have requested relief or clarity on this point that this can be an elective extension and not a mandatory extension.

Eric Yauch:   16:16
So onto the topic that's dominated tax conferences for the past two years: Opportunity Zones. This is another topic we could discuss for a week. Kate, could you walk us through a high overview of what the tax benefits generally are for Opportunity Zones and how funds have been affected by the coronavirus shutdown?

Kate Kraus:   16:30
Sure. So with the Opportunity Zone tax rules, there are two different kinds of benefit. One is, let's say I sold a Picasso because, as I already discussed, I'm incredibly wealthy. So I sold my Picasso in 2018 and I had $100 million of gain. And I didn't want to pay a tax on the gain, obviously. So, by making an investment of $100 million into an Opportunity Zone fund, I can defer that gain until 2026. And I can also reduce that amount of gain that's taxed by either 10 percent or 15 percent if I have a five- year or seven-year holding period on the Opportunity Zone fund where that holding period has to end by the end of 2026. So that's the benefit for the Picasso gain that I get. But wait, there's more.  

Kate Kraus:   17:16
In addition to all of that, if I hold my investment in the Opportunity Zone fund for at least 10 years and then sell that, I don't have to recognize any gain on the sale, even if I've been reporting depreciation from the fund. So everything that we would have been depreciation recapture can also avoid taxation, so that's an amazing result and a lot of people have been very eager to take advantage of these rules.  

Kate Kraus:   17:41
Everyone is obviously very concerned about COVID-19 and what it means for the economy. But Opportunity Zone fund investments are still being formed. I had two new clients in the last week come to me wanting to form new funds, so things are still moving forward, at least with some projects. It is true that Opportunity Zone funds are reevaluating what they're doing and how their plan works or doesn't work in light of the new environment as the market has obviously changed.  

Kate Kraus:   18:11
And another concern is that people are worried that tax rates will go up. And the way the rules work now, the tax rate that applies to my Picasso gain when I picked it up in 2026 will be the 2026 tax rate, not the 2018 tax rate of 20 percent. So if the tax rate is substantially higher in 2026 that would be unfortunate.  

Kate Kraus:   18:35
So some people are thinking about whether they want to liquidate their fund or pull out of their fund and here the tax consequences aren't really that bad because many, perhaps most people have losses in 2020. And so if I pull my investment out now in 2020, that will cause me to recognize my Picasso gain now. But that will be like a 2020 gain, not a 2018 gain, so I can use some of my 2020 losses to offset my Picasso gain. And I might have capital losses this year. And as an individual, I can't carry that back to 2018 to shield a Picasso gain if that were recognized in 2018. So by being able to shift that Picasso gain into 2020, I could still be getting a tax benefit, even though it's not the benefit I was hoping to get when I went into investment.

Eric Yauch:   19:26
So looking at things as they stand now, the entire U.S. was declared a disaster area, and that automatically triggers two relief provisions. I was wondering if you could discuss those and how it could affect funds.

Kate Kraus:   19:37
Sure. So the regulations automatically have built in some extensions when bad things happen. And these relate to structures where you have your qualified Opportunity Zone fund, and that's what gets the cash from the investors, and then in most thunder structures so that they contribute the cash into a lower tier entity called a Qualified Opportunity Zone business, or QOZB. And the QOZB gets what's called the working capital exception because there's a limit on how much cash it can hold.  

Kate Kraus:   20:05
But if it qualifies for this exception, it can hold a lot of cash for a longer time. And generally the exception is that it can hold cash for 31 months before it sends it. The regulations give you some extensions. One of them is if you've applied to the government for a permit or some other governmental action, and there's delay because the government is being very slow to get back to you, that will let you extend that 31-month period for holding the cash. And an even better extension is a result of the disaster declaration, which lets QOZB extend the period from 31 months to 55 months. That's an up to 24 months extension.  

Kate Kraus:   20:50
And here it's important to remember this is really just about the safe harbor for how long you're holding cash. This does not appear to change the 62-month period safe harbor for a QOZB that has tangible property. And that 62-month period does not appear to be extended as a result of the disaster declaration. And it also does not appear to extend the 30-month deadline for substantially improving property.  

Kate Kraus:   21:19
So, normally for a QOZB when it's evaluating if it has enough good tangible property, it needs at least 70 percent of its tangible property to be good property. Either it has to be original use property or substantially improved, and to be substantially improved, that means that it has to double its basis. So if it paid $1 million to acquire the building, it has spend another $1 million to improve the building. And it has to do that within a 30-month timeframe.  

Kate Kraus:   21:44
That 30-month timeframe is still set at 30 months, so you might be able to have cash sitting in your bank for 55 months. But you have to be doing enough work and spending enough of the cash on your improvement to get it so that it's substantially improved. You've doubled your basis within that 30-month timeframe.

Eric Yauch:   22:02
And it sounds like there is also an extension of a grace period for qualified opportunity fund reinvestment. Is that the case?

Kate Kraus:   22:08
Yeah, that's right. That one, it's so early in when the funds have been set up that this one is not going to be as useful here at the moment. But it might become more useful as time goes on. And there's a period here -- this is talking about not the QOZB, the lower tier entity, but the qualified Opportunity Zone fund itself. If it sells its interest in a QOZB or if it's holding property directly, and it sells that qualified property, it's holding cash, normally there's a limit on how much cash it would hold.  

Kate Kraus:   22:36
But if it received that cash from the sale or as a distribution from a QOZB, it gets an automatic 12 months to redeploy that cash for new property that qualifies. And as a result of the disaster declaration, the QOF now gets an additional 12 months to reinvest its proceeds. So that's the relief that's already built in to the regulation.  

Kate Kraus:   22:58
And then, in addition to that, the IRS has given some limited relief to the 180-day period for investing in an Opportunity Zone fund. So normally you have 180 days from the date you sold your Picasso to the day you invest in the Opportunity Zone fund, and there's some exceptions to how that works. But now, with this additional relief, if you're 180-day deadline falls between April 1 and July 15, it can be pushed to July 15. So that's moderately helpful for people who had gains recognized through a partnership. They might have been starting with December 31 as the starting date for their 180-day period, so that period would just be ending at end of June anyway. So this is really just a two-weeks extension for them. So it's something, but hopefully we'll be getting more guidance and more relief here as well.  

Kate Kraus:   23:47
On a different point that has nothing to do with COVID-19 or economic relief, the Opportunity Zone regulations were amended on April 1, and they have a sleeper provision that we are just now starting to realize the implications of it, and it's a really big give to taxpayers.  

Kate Kraus:   24:08
So, as I mentioned, if you have your two tier structure with a QOF owning interest in the lower tier entity, QOZB, the QOZB normally has to have at least 70 percent of its tangible property qualify under a bunch of tests and criteria. Under this amendment, it looks like that 70 percent test is just turned off during the period that the QOZB is satisfying the working capital exception. I can give you the citation. These sections are very difficult with all the letters and numbers. It's at 1.1400Z2(d)-2(b)(4)(ii) or you can just do a search for "safe harbor for working capital" if you have a searchable form of the regulations.  

Kate Kraus:   24:53
And the key there is that it talks about how if the working capital exception is satisfied, the entity itself qualifies as a QOZB. And the key word in that section is that thing that if the entity qualifies. That's something that effectively will turn off the 70 percent test for the QOZB, so long as it's satisfying the working capital exception.  

Kate Kraus:   25:17
So that means that you have to have cash in the bank to satisfy the working capital exception because otherwise it won't be eligible. And another thing  to keep in mind is that after that period, after you've finished development and you're operating and you don't have the working capital safe harbor activated anymore, you have to satisfy all the test in. So you still have to make sure that if you were improving the property, that you satisfy the substantial improvement test, which means that you doubled your basis in 30 months.  

Kate Kraus:   25:46
I should note that this is not the most clear part of the regulation. And there are other parts of the regulation that might be viewed as taking a different position. So it looks like taxpayers can take a position that the 70 percent test is turned off during the startup period, so long as they're satisfying the working capital exception.  

Kate Kraus:   26:07
There might be some ambiguity in how this actually get interpreted, but there's at least a position that can be taken and hopefully the government will give more guidance on this point.

Eric Yauch:   26:16
OK, Kate. That's a lot to unpack there and I want to thank you for fitting us in and giving us this insight. We really appreciate it.

Kate Kraus:   26:22
Sure. Thank you. It was great talking with you.

David Stewart:   26:24
And now, coming attractions. Each week we highlight new and interesting commentary in our magazines. Joining me now from her home is Content and Acquisitions Manager Faye McCray. Faye, what will you have for us?

Faye McCray:   26:36
Thank you, Dave. In Tax Notes State, Samantha Breslow discusses the Internet Tax Freedom Act. Roxanne Bland considers the recent focus at the state level on the consumption tax model. In Tax Notes International, Peter Hann and Hafiz Choudhury review tax measures to address the economic impact of the COVID-19 pandemic. Dhruv Sanghavi  considers HMRC v. Fowler, which addresses income categorization for tax treaty purposes. On the Opinions page, Roxanne Bland discusses taxing digital advertising services. Nana Ama Sarfo looks at the OECD's strong response to major financial crises. And now for a closer look at what's new and noteworthy in our magazines, here is Tax Notes Executive Editor for Commentary Jasper Smith.

Jasper Smith:   27:23
Thanks, Faye. I'm here with Michael Cannon of Gibson, Dunn and Crutcher LLP, calling in from his home in Dallas to briefly discuss his article titled, "Double Tax Benefits in The CARES Act," which was recently published in our Tax Notes magazines. Welcome, Mike.

Michael Cannon:   27:38
Thanks.

Jasper Smith:   27:38
Can you give our listeners a brief overview of your piece?

Michael Cannon:   27:41
Yeah, definitely. So our article discusses whether expenses that are funded using the proceeds of loans made under the Paycheck Protection Program in the CARES Act are deductible. And normally, the question of whether ordinary course operating expenses are deductible or not wouldn't warrant an article.  

Michael Cannon:   28:03
I think this particular question is more interesting because arguably that type of deduction would confer a double benefit on taxpayers. And to understand why you need to understand a little bit about the Paycheck Protection Program.  

Michael Cannon:   28:17
The Paycheck Protection Program is arguably one of the most important parts of the legislative response to the COVID-19 pandemic that we're currently facing. And under the program, eligible borrowers, which are generally small businesses, are eligible to receive loans of up to $10 million. And those loans have to be used to fund critical operating expenses -- things such as wages, rent, etc. And assuming a loan is used to fund the appropriate types of expenses, then the program provides that the loan can be forgiven, and from a tax perspective, the CARES Act is very clear and explicit in providing that the borrower doesn't recognize income if the loan is forgiven.  

Michael Cannon:   29:09
And this is different than a normal borrower, who would generally recognize a cancellation of indebtedness income when that borrower is relieved from having to repay a loan. But the CARES Act is silent about whether an employer can deduct expenses that were effectively funded tax free using the proceeds of one of these Paycheck Protection Program loans.  

Michael Cannon:   29:32
And so the question is really, how should that silence be construed? And as our article explains, there's at least an argument that the expenses are deductible. Although the authorities in this area are a bit murky, I think that as a policy matter, given the unprecedented crisis we're facing, the answer should be that the expenses would be deductible because that would maximize the benefit of this program to the taxpayers that qualify for loans and forgiveness of those loans under it.  

Michael Cannon:   30:02
And ideally, Congress would write legislation clarifying expenses are deductible. But I also think that in light of the applicable authorities that exist, there could be a path forward for Treasury to step up and take that action and affirmatively tell people that they can go ahead and file returns taking those deductions. So that's our article in a nutshell.

Jasper Smith:   30:22
Yeah, that's all fascinating, Mike. Thanks for talking about it. And can you share with our listeners where they can actually reach out to you online?

Michael Cannon:   30:29
Yeah, so the best way to reach out to me is via my email. That's mcannon@gibsondunn.com. 

Jasper Smith:   30:40
You can find Mike's article online at taxnotes.com. And be sure to subscribe to our YouTube channel for more in-depth discussions on what's new and noteworthy in Tax Notes. Find us on YouTube at Tax Analysts. That's plural with an "s" at the end. Back to you, Dave.  

David Stewart:   30:53
That's it for this week. You can follow me online at @TaxStew, that's S-T-E-W, and be sure to follow @TaxNotes for all things tax. If you have any comments, questions, or suggestions for a future episode, you can email us at podcast@taxanalysts.org.  And as always, if you like what we're doing here, please leave a rating or review wherever you download this podcast. We'll be back next week with another episode of Tax Notes Talk.