IRS to Clarify Rules on Payments in Lieu of State and Local Taxes

State and Local Taxes

The Service warns that a substance-over-form recharacterization may ensue.

The IRS announced that it plans to issue regulations in response to state legislation intended to help taxpayers avoid the $10,000 limitation on the deduction for state and local taxes, known as the Tax Cuts and Jobs Act. That limitation applies to individual taxpayers for tax years beginning after December 31, 2017 and ending before January 1, 2026.
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