
Trump replaces Billy Long as IRS boss; Bessent takes over temporarily
Aug. 8 (UPI) -- President Donald Trump on Friday replaced Bill Long as Internal Revenue Service commissioner after less than two months on the job with Treasury Secretary Scott Bessent in a temporary role.
The New York Times was the first media outlet to confirm his ouster and Long later announced his departure on X with plans to become Iceland's ambassador.
"It is a honor to serve my friend President Trump and I am excited to take on my new role as the ambassador to Iceland. I am thrilled to answer his call to service and deeply committed to advancing his bold agenda. Exciting times ahead!"
A spokesperson for the Treasury Department, which oversees the IRS, said in a statement to NBC News that the department "thanks Commissioner Long for his commitment to public service and the American people. His zeal and enthusiasm to bring a fresh perspective to the Federal Government was evident in both the House of Representatives and as part of the Trump Administration."
Bessent has already been tasked with negotiating tariff rates as part of trade talks. Also, he is helping with the search for ultimately the next Federal Reserve chairman.
Long was confirmed by the U.S. Senate on June 12 and sworn in as commissioner four days later to a term that was supposed to last through Nov. 12, 2027. Trump nominated him on Dec. 4, 2024. While awaiting confirmation, he was appointed as a senior adviser in the Office of Personnel Management.
Lpng had limited tax experience and had supported the abolishment of the agency, CNN reported.
He served in the U.S. House from 2011 to 2023, representing a district in Missouri, and was previously an auctioneer.
On Thursday, he sent an email to all IRS employees with the subject line: "It's Almost FriYay that read: "Please enjoy a 70-minute early exit tomorrow. That way you'll be rested for my 70th birthday on Monday," The New York Times reported.
He signed it: "Call Me Billy."
The IRS has been processing tax forms since the April 15 deadline with extensions until Aug. 15.
The IRS workforce has shrunk 25% amid Trump's government cuts and mass buyouts. In all there are plans to cut its 102,000 workforce by up to 40%, according to a memo obtained by CBS News in April.
And 26% of the agents who conduct audits have left the agency by May, according to the report.
And the IRS has been dealing with new deductions and tax cuts after the passage of the sprawling spending bill, labeled as the "One Big Beautiful Bill Act." The new law has no tax on tips or overtime.
Seven different people will have led the agency since Trump won the 204 election.
Danny Wefel held the role until Trump's inauguration on Jan. 20 despite a statutory five-year term.
Other acting commissioners had policy differences with Trump: Doug O'Connell and Melanie Krause. Another acting boss, Gary Shapley, was appointed but ousted Bessent a few days later because he didn't want him. Deputy Secretary Michael Faulkender became the acting commissioner until Long was confirmed.
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Forbes
11 minutes ago
- Forbes
As Meme Stocks Make A Comeback, Beware This Tax Trap
A t the height of the pandemic born meme stock boom in 2021, the 50-something investor tried his hand as a day-trader, rapidly buying and selling stocks such as AMC Entertainment. In the end, he racked up more than $7 million in gains and just a hair over that in losses, resulting in what he thought was, more or less, a wash, taxwise. But it wasn't a wash, because of the too-often neglected 'wash sale' rule, which holds that you can't claim tax losses on a stock that you sell at a loss, if you purchase the same security (or a similar one) in the 30 days before or after the sale date. To the trader's surprise, the IRS flagged over a half million dollars of his losses as 'wash sales'—resulting in a six-figure tax bill for 2021 that he's still paying off, even though he had lost money on his trading that year. (The investor, who has given up day-trading, now holds a conventional job and asked not to be identified.) His experience provides a timely cautionary tale given that meme stocks have made something of a comeback this summer. One example is Opendoor Technologies, the real estate fintech whose stock hit nearly $40 a share in February 2021, during the last meme stock boom. It traded as low as 51 cents this past June, putting it at risk of delisting by NASDAQ. But in July, it surged more than fivefold to $3.21, driven higher by buzz on X and Reddit touting the company as the next big thing. (It closed yesterday at $1.95.) These days, more individual taxpayers run the risk of running afoul of the wash sale rule thanks to the spread of commission-free stock trading (credit the pressure applied by fintech Robinhood); the ability to trade stocks from a smart phone app; and a younger generation that is far readier to rely on social media tips, including niche day-trading sub-Reddits, for investment advice. The latest World Economic Forum (WEF) survey of investors across the globe found that 57% of Gen Z and Millennials respondents ranked recommendations from social media or online communities as important vs. 37% of Gen X and just 20% of Baby Boomers. The WEF report, done in collaboration with Boston Consulting Group and Robinhood, estimated that since 2016, the number of users of stock trading apps has been growing at a compound annual rate of 20%. If you're one of those new users, you too could fall into the wash sale tax trap. Here's a primer to keep you safe. Most taxpayers more or less understand the basics of capital gains and losses. You realize a gain or loss when you sell a security. If your realized gains are more than your realized losses, you have a taxable capital gain (the tax rate will depend on whether those gains or losses are long-term or short-term). In contrast, if your realized losses exceed your realized gains, you can claim up to $3,000 (or $1,500 if you are married filing separately) to offset your other taxable income. If your losses exceed the limit, you can carry the loss forward to later years, subject to some restrictions. You figure your realized gain or loss by subtracting the basis of a security (generally, the cost that you paid) from the sale price. All of the activity in the middle is, for tax purposes, just a bunch of squiggly lines. The ups and downs may mess with your head—and your blood pressure—but they won't hit your wallet until you're ready to cash out. That's why advisors often suggest that you hold onto assets during periods of volatility. If and when the value goes back up, there are no tax consequences. But when you sell or otherwise dispose of the asset, you have a taxable event. The basics above apply to securities held in regular taxable accounts, not to gains or losses that happen inside your retirement accounts. Losses and gains in your traditional IRA, Roth IRA or 401(k) don't show up on your tax return. Instead, your withdrawals from a traditional pre-tax IRA or 401(k) are taxed later, at ordinary income rates. Retirement withdrawals from Roth IRAs are usually tax-free. Wash Sale Rules When you're buying and selling stocks quickly, you may trade winners and losers within days of each other. If you're not careful, you can easily run afoul of the wash sale rules. A wash sale happens when you sell a stock or other security at a loss and then buy the same security—or a similar one—within 30 days before or after the sale. This rule applies to most of the investments in a typical brokerage account, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), and options. (It does not, however, under current law, apply to the sale of crypto or NFTs. More on that below.) Specifically, a wash sale is triggered if you do any of the following within a 61-day period: Buy a substantially identical stock or security; Acquire a substantially identical stock or security in a fully taxable trade; Enter into a contract or option to buy a substantially identical stock or security; or Acquire substantially identical stock for your IRA, Roth IRA or 401(k). If you do any of those things within a 61-day period—beginning 30 days before the sale and ending 30 days after the sale—the wash sale rules will apply. (The extra day in the 61 days is the sale date.) The wash-sale rule applies across all your accounts, so buying and selling inside one account can impact securities inside another account. And, importantly, the rule applies across calendar years, meaning that the clock remains ticking on a sale made on December 29 into the next year (you don't get a pass for waiting until year-end to buy or sell). The IRS isn't particularly helpful when it comes to determining what makes a security 'substantially identical.' IRS guidance suggests that you consider the facts and circumstances, which include some common-sense applications. Typically, stocks or securities of one corporation are not considered substantially identical to stocks or securities of another corporation (but in a reorganization, the stocks of the predecessor and successor corporations may be). If you can't figure it out, or if you're worried about inadvertently entering into a wash sale, consider waiting until the 30-day window has closed since the sale date. So, what happens if a sale is considered to be a wash sale? The loss is disallowed, meaning you can't use it to offset any capital gains. That can result in an ugly tax bill. The Meme Stock Problem Since the value of some stocks—especially meme stocks—may rise sharply, investors may be quick to hit the buy button. Often, those transactions are funded by selling other stocks, sometimes within minutes of each other or before the position is closed. Investors might also rely on margin trading. You can think of a margin like a line of credit since it's typically money borrowed from the broker—investors post a sum as a deposit, but less than the full cost of a trade, to cover a large trade. The result is sort of a perfect storm for the at-home investor. The access to quick cash (or leverage) means that you can buy and trade without worrying about funding, so long as you 'make' as much as you 'lose.' With some stocks, such as meme stocks, that may all happen very quickly. As shares start trending down, you may be tempted to offload them immediately and then buy them back again as the stock rebounds. That level of furious trading could land you back or close to your original position, even if you experienced significant losses along the way, which feels like a win. That is, until Uncle Sam steps in. Then, like the former day trader in our story, you could find the IRS demanding money you don't have. It's not all bad news. Any disallowed loss is added to the cost basis of the newly purchased stock, which means that when you sell that stock in the future, you may get a tax break. And, the holding period of the stock that you sold is added to the holding period of the new stock, which may result in the sale being treated as a long-term gain (meaning a gain on an asset held more than a year) at lower long-term capital gains rates. The top tax rate on a long term gain is 20%, or 23.8% if you are also subject to the net investment income tax (NIIT). Short-term gains are taxed as ordinary income, at a top rate of 37%, plus that nettlesome 3.8% NIIT. Of course, that future tax benefit won't necessarily help you settle an outstanding tax bill, but it may stop the bleeding for next year. Your Intentions Don't Matter The wash sale rule has been around for almost as long as the modern tax system. The goal of the rule, which Congress first passed in 1921, was to 'prevent taxpayers from taking colorable losses in wash sales and other fictitious exchanges.' At the time, the rule was fairly simple: If an investor sold a security at a loss and then repurchased the same or substantially similar security within 30 days, the loss would be disallowed. The "substantially identical" requirement wasn't tacked on until 1954. Today, buying and selling within a short time frame is done deliberately as part of a strategy that some taxpayers use to reduce their tax bill. Sometimes referred to as tax-loss harvesting, the goal is to sell stocks that are losing money and use the loss to offset the money-makers. That still works, so long as you don't run afoul of the wash sale rules. But, importantly, the transaction doesn't have to be intentional to trigger the wash sale rule. 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Remember: The rule applies to all of your accounts. If you have more than one broker, not all of your wash sales may appear on a single Form 1099-B. Transactions made through other platforms may not be reported as wash sales even if they are taxable as such, because platforms don't share that kind of information with each other. That's why you need to keep good records and double-check at tax time to see whether your transactions might count as wash sales. Or better yet, avoid wash sales when you trade. The rules involving wash sales and a lot of other tax rules too, are complex, so even when you're aware of them, it's easy to fall into a tax trap. A financial or tax advisor may be able to help you avoid the pitfalls—and a hefty tax bill. 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Bloomberg
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The Hill
40 minutes ago
- The Hill
7 states most likely to follow Texas in redistricting
A redistricting arms race is heating up around the country as other states look to follow Texas's lead in redrawing their congressional lines ahead of the 2026 midterms. Multiple Democratic and Republican governors have expressed interest in their states conducting their own redistricting process to add as many seats as they can for their parties and increase the chances that their party can win control of the House next year. But whether they will be able to depends on the state and its own unique rules. Here are the seven states most likely to follow Texas in redistricting: Ohio Ohio is the only state in the country, even including Texas, already guaranteed to redraw its district lines as it's in a bit of a different situation than the others. State lawmakers are required to approve a new map ahead of the midterms because the current map, in place since 2022, was only approved by a simple majority along party lines rather than a bipartisan supermajority. But with Republicans firmly in control of both houses of the state legislature, the party still seems likely to pick up a few seats with the next map. The two Democratic lawmakers most likely to potentially lose their seats in the process are Reps. Marcy Kaptur and Emilia Sykes in the 9th and 13th Congressional districts. So while Republicans already occupy 10 of the 15 House seats that Ohio has, they could still pick up a few more. California California Gov. Gavin Newsom (D) has been arguably the most visible Democrat in responding to Republicans' efforts to use redistricting, and the Golden State seems to be the party's best chance to pick up the most seats if Texas approves a new map. The process for California to redraw its lines in time for the 2026 midterms is a bit complicated — but possible. The state has an independent redistricting commission that determines its district lines, but Newsom confirmed on Friday the state would move forward with a special election in November that would allow them to create a new map in place for the rest of the decade. The independent commission would remain intact for the reapportionment after the 2030 census, and a new map would only be used if Texas or another state redraws its lines first. But presuming Texas does redistrict, Newsom and state Democrats appear committed to advancing a plan that could gain their party up to five seats. Florida The Sunshine State is the other significant source of possible gains for the GOP through redistricting, and Gov. Ron DeSantis (R) has been increasingly hinting at the state GOP following Texas's footsteps to add more Republican seats. Florida state House Speaker Daniel Perez (R) announced on Thursday that he would form a redistricting committee to explore possible maps and legal questions associated with how the lines are drawn. But he didn't specify the timeline for redistricting, saying the committee's members would be announced next month. But a few Democrats could be targeted if the process advances, including Reps. Debbie Wasserman Schultz, Jared Moskowitz and Darren Soto. And Republicans are feeling particularly emboldened after the state Supreme Court upheld the current map against claims of racial gerrymandering. Indiana Along with the big-ticket states that could give the GOP multiple extra seats, the Trump administration is also putting pressure on smaller states that could net only one seat. Vice President Vance visited Indianapolis on Thursday for a meeting with Indiana Gov. Mike Braun (R) to discuss mid-decade redistricting. Braun didn't commit to redistricting following the meeting, but he left the door open. Meanwhile, Trump's allies were reportedly exploring options in Indiana late last month. Braun would need to call a special session of the legislature and Republicans would have to move quickly, but the party has a supermajority. If approved, a new map would most likely target Rep. Frank Mrvan (D-Ind.) in the northwestern part of the state. Missouri Missouri is another state where Republicans theoretically could pick off another Democratic-held seat if the party members want to push forward. The administration has also put pressure on the GOP in the state, with Rep. Emanuel Cleaver (D-Mo.) as the likely target, but the reaction from state lawmakers has been mixed. State House Speaker Pro Tempore Chad Perkins initially expressed doubt about redistricting early, but he showed more openness to it after receiving a call from the White House. But state Senate President Pro Tempore Cindy O'Laughlin told The Missouri Independent that she also wasn't too eager about the plan, and Perkins expressed concern about possible backlash to Gov. Mike Kehoe (R) calling a special session. New York New York Democrats seem just as determined as their California counterparts to update their district lines, but their chances of being able to update them before next year's elections seem slim. The Empire State also uses an independent commission to draw its lines, with approval from the state legislature. State lawmakers can propose a constitutional amendment to voters to change the system, but any amendment needs to pass in two consecutive sessions of the legislature before being proposed to voters. This would mean that no change could go into effect until ahead of the 2028 elections at the earliest. But Gov. Kathy Hochul (D) has pledged to look at all available options, acknowledging the time constraints and wanting a faster timeline. She said the independent commission should be disbanded or changed, and she would also look at litigation options. New Jersey The Garden State would be an ideal spot for Democrats to try to pick up a seat or two, but barriers put in place will likely make this not possible before the midterms. New Jersey also has an independent commission that lawmakers would need to go around to enact a new map, but its state constitution also specifically prohibits mid-decade redistricting. Both of these could be overcome with a constitutional amendment, and Democrats have comfortable control of both houses of the state legislature, but likely not enough time remains to change it in advance. The public needs a three-month notice period before voting on an amendment, which means this past Monday was the deadline for getting it passed ahead of Election Day on Nov. 4.