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Weekend Insights: I Haven’t Been Everywhere, but It’s on My List

Aug. 8, 2021, 2:00 PM

My daughter is putting the finishing touches on our virtual day in Buenos Aires. The menu is still a secret, but I’m hoping that our extra activities include cyber-touring the city and learning to tango.

A male Colombian tourist poses with an Argentine professional tango dancer at Florida Street, Buenos Aires.
Photographer: JUAN MABROMATA/AFP via Getty Images

Recreating days abroad has become something of a tradition for my family since the start of the pandemic. Since we couldn’t travel to cities around the world, the cities have come to us. We started with some of our favorites: Paris, Rome, Munich, and Barcelona, before trying some places we’ve never been before, like Tokyo. It’s been a great learning experience—and a lot less expensive than jumping a flight.

We are, of course, looking forward to the return of travel. Lufthansa announced this week that it had resumed direct flights from Philadelphia to Frankfurt, the same week that Delta resumed flights from JFK to Dublin.

Travel makes the world smaller, and that’s a good thing. We are reminded that we are not so different from each other. When we see how other people live and hear their stories, we learn who they are and what’s important to them. That context matters. And that’s what’s so great about our Tax Insights. Tax practitioners from all over the globe share their passion for tax and their expertise in various subjects. And, as when we travel, when we read those perspectives, we come away knowing a little more than we did before.

That’s what we aim to do this week, as always, with the latest federal, state, and international tax analysis.

Kelly Phillips Erb

Quick Numbers Trivia

As part of the CARES Act, aviation excise taxes for the transportation of persons (section 4261) and property (section 4271) were waived between March 28, 2020, and December 31, 2020. Now that the waiver has expired, what are the federal excise tax rates on domestic and international airline travel for passengers in 2021?
(Answer at the bottom.)

Our Roundup

This week, our experts touched on a wide range of topics from charitable unitrusts to transfer pricing methods. To bring you up to speed, here’s our roundup:

Transfer pricing continues to be a global theme this year—but it’s not always about multinational companies. In Cannabis Tax and Transfer Pricing—Part 1—Introduction, David Merrick of Riverbank Consulting and James Mann of the Law Office of James B. Mann shows how section 482 applies to cannabis businesses operating in multiple states. And in Part 2, the authors walk through transfer pricing methods and explain what works and what doesn’t for the cannabis industry.

Companies that are doing business around the world, however, need to be aware of changes that could affect transfer pricing methodology. In Dutch Ministry of Finance Report on Tax Rulings, Eduard Sporken of KPMG Global Transfer Pricing Services considers the latest report published by the Dutch Ministry of Finance on 2020 tax rulings with international attributes and discusses the progress of rulings during the Covid-19 pandemic.

As countries make big changes, taxpayers and tax advisors need to take notice. In Turkey’s MLI Strategy—and its Impact on Turkish Investments in Netherlands, Abdulkadir Kahraman and Mahmut Aydemir of EY discuss the draft law on ratification of the Multilateral Instrument which has been submitted to the Grand National Assembly of Turkish Parliament Plan and Budget Committee, and the impact the Turkish approach will have on the Turkey–Netherlands tax treaty.

Dutch historic sailing ships gather in Muiden, outside of Amsterdam on June 9, 2020.
Photographer: KOEN VAN WEEL/ANP/AFP via Getty Images

Tax treaties are intended to solidify tax positions for taxpayers living in or doing business in two countries, but often, questions remain. In India: Two Rulings on Double Tax Treaties, Shailendra Sharma explains two tax rulings in India on the applicability of the provisions of double tax treaties—a recent decision by the Mumbai Income-tax Appellate Tribunal, and a ruling by the Delhi High Court.

In the U.S., the tax world is focused on tax changes that could disrupt existing planning strategies. The potential for higher capital gains tax rates could make the deferral objective of charitable remainder unitrusts (CRUTs) undesirable. In Controlling Capital Gains Deferral With a ‘Spigot’ Net Income Charitable Remainder Unitrust, Jeff Gonya, Chris Moran, and Allison Church of Venable explain how to turn a CRUT into a “spigot” net income trust, which provides the donor with flexibility and control for deferring income.

For now, U.S. tax rates may stay put even as inflation takes a hike. As a result, investors are searching for hedges. In With Inflation on the Rise, Which Cryptocurrencies Can Provide the Best Hedge?, Pat White of Bitwave looks at adding cryptocurrency to your portfolio and the tax implications.

And while global markets are looking to recovery as travel and business resume, not every deal is a money-maker. But that’s not necessarily a bad thing. In Tax-Loss Harvesting: Be Tax-Smart All Year, Not Just at Year-End, Frank Pape of Russell Investments explains how to make the best use of your investment losses to minimize taxes.

Listen In

Investors interested in how companies meet environmental, social, and governance (ESG) standards are also becoming increasingly interested in where—and whether—a company is paying tax. Witold Henisz, a professor at the University of Pennsylvania’s Wharton School and founder of the ESG Analytics Lab, spoke with Bloomberg reporter David Hood on Bloomberg’s Talking Tax podcast about how investors are turning to local disclosures to assemble “bespoke data” showing a company’s tax burden and payments, and why companies will likely face mounting pressure to disclose that type of information.

And how does a company’s culture translate into hiring? In a recent episode of the Taxgirl podcast, Kelly is joined by Derrick Coleman, managing director for Creative Financial Staffing of Los Angeles, to talk about how a diverse workforce is good for both the culture and the bottom line of an organization. Coleman previously authored a piece for Insights on How to Grow and Maintain Diverse Hiring Practices Post-Pandemic.

Write for Us

Bloomberg Tax Insights articles are written by tax professionals offering expert analysis on current issues in tax practice and policy, tax trends and topics, and tax and accounting firm practice and management. If you have an interesting, never-published article for publication, we’d love to hear about it. You can contact our Insights team by emailing TaxInsights@bloombergindustry.com.

Spotlight

This week’s spotlight is on CPA Brad Garland. Garland jokes that in a year when Covid-19 meant not attending Auburn football games, not seeing new Marvel movies in the theater, and not getting to help individuals and businesses in person, he was the human on the other side of the video call steering peers, associates, and clients through federal and state pandemic relief.

Beyond Tax

From working at home to working abroad, it’s clear that our vision of what’s “normal” has changed. Recent EY surveys suggest that reopening law departments will find their employees have new expectations about work. Paula Hogéus and Nicholas Bruch of EY argue in In-House Lawyers Want More Flexible Work Arrangements that the transition back to work offers law department leaders a chance to rethink their pre-pandemic operating models and accelerate transformation. Putting employee enablement at the center, they say, will be key.

Quick Numbers Answer

Domestic air travel is taxed at 7.5% of the ticket price per person under section 4261. There is an additional tax—$4.30 in 2021—for each flight segment, or one takeoff and one landing.

An American Airlines plane lands at the Miami International Airport on June 16, 2021 in Miami, Florida.
Photographer: Joe Raedle via Getty Images

The section 4261 excise tax on any amount paid for international air transportation, if the transportation begins or ends in the United States, is $19.10 in 2021. A lower rate of tax—$9.60—applies to a domestic segment beginning or ending in Alaska or Hawaii, and the tax applies only to departures.

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More Great Tax Content

This is a weekend roundup of Bloomberg Tax Insights, written by practitioners and featuring expert analysis on current issues in tax practice and policy. For a full archive of articles, browse by jurisdiction at Daily Tax Report, Daily Tax Report: State, Daily Tax Report: International, Transfer Pricing Report, and Financial Accounting.

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What Did You Think?

We hope you found Weekend Insights valuable. We’d love to hear your suggestions for making it more enjoyable. Here’s our email: TaxInsights@bloombergindustry.com. Thank you for reading!

To contact the reporter on this story: Kelly Phillips Erb in Washington at kerb@bloombergindustry.com

To contact the editor responsible for this story: Jeff Harrington at jharrington@bloombergindustry.com

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