Tag: Federal Taxes (US)

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How a Century of Real-Estate Tax Breaks Enriched Donald Trump

Twenty-five years before he was elected president, Donald J. Trump went to Capitol Hill to complain that Congress had closed too many tax loopholes. He warned that one industry, in particular, had been severely harmed: real estate.

The recent demise of real-estate tax shelters, part of a landmark 1986 overhaul of the tax code, was “an absolute catastrophe for the country,” Mr. Trump testified to Congress that day in November 1991.

“Real estate really means so many jobs,” he said. “You create so many other things. They buy carpet. They buy furniture. They buy refrigerators. They buy other things that fuel the economy.”

Mr. Trump was sounding a theme that has made real estate perhaps the tax code’s most-favored industry.

Legislators lapped it up. Mr. Trump and his fellow real estate investors got much of what he wanted, including the ability to fully deduct losses — sometimes only on paper — against other income.

Mr. Trump’s low taxes over the years were largely a product of his businesses hemorrhaging money, according to federal tax records obtained by The New York Times. But the records also show that so-called depreciation losses and other benefits for the real estate industry have helped Mr. Trump reduce his federal income taxes. In 2016 and 2017, Mr. Trump paid $750.

From the beginning, the real estate industry, with its claim to be a bedrock of the American way of life and its formidable lobbying power and lavish campaign contributions, has held disproportionate sway over how tax laws are written.

Tax breaks for real estate have been embedded in the federal income tax law for a century. New benefits sprouted up every few years. Even when lawmakers cracked down on business-friendly tax treatment, they often made special exceptions for real estate.

“The real estate industry has enjoyed the most lucrative tax breaks for decades,” said Victor Fleischer, a tax law professor at the University of California, Irvine, and former chief tax counsel for the Senate Finance Committee. The industry “thinks of the tax code as a basket of goodies to feast on rather than a financial obligation of doing business.”

The perks come in many varieties. One allows real estate investors to avoid capital-gains taxes when they sell properties as long as they use the proceeds to quickly buy others. Another gives developers a big break on taxes when they spend money on historical preservation.

Foremost among them is a deduction for depreciation, a provision originally included in the federal tax code in response to lobbying by the railroad industry.

Taxpayers are allowed to deduct from their annual taxable income a portion of the cost of an asset such as a locomotive or a building, as well as money spent on improving that asset. If you buy a building for $270,000, you can deduct $10,000 a year from your taxable income for 27 years. A profitable business can actually report losses on its tax returns because of depreciation deductions.

The tax benefit was meant to reflect the deterioration in value over time of an asset. But for the real estate industry, it can be a boondoggle: Many buildings kept in reasonable repair increase in value over time, unlike, say, cars or computers.

Depreciation is the ultimate tax shelter, critics say, because it permits real estate investors to take deductions for spending other people’s money. If a bank lends an investor $70 million to buy a $100 million office building, and none of the principal gets repaid for a decade — a common structure for such loans — the investor still gets to deduct that $100 million over several years, even though only $30 million of that is his own money.

In 1962, Congress passed rules that made the depreciation tax break less lucrative when someone sold the asset on which they had been taking deductions. But Congress exempted real estate.

“The real estate lobby always had a stronghold,” recalled Donald Lubick, at the time a top tax official in President John F. Kennedy’s Treasury Department.

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Credit…Zach Gibson for The New York Times

Mr. Trump has taken hundreds of millions of dollars in depreciation deductions, his tax records show.

Most but not all of his depreciation expenses since 2010 stemmed from money he spent improving his golf courses and on transforming the Old Post Office building in Washington into a luxury hotel. Some of that spending was done with nearly $300 million that he borrowed from Deutsche Bank.

“That’s Trump’s story,” said Michael Graetz, a top tax official in the first Bush administration and now a professor at Columbia Law School. “His losses are somebody else’s money.”

Mr. Trump has publicly credited depreciation with lowering his tax bills. “I love depreciation,” he said during a presidential debate in 2016.

In reality, the fact that his businesses were losing money was a major factor in reducing his taxes.

For example, for Mr. Trump’s commercial real estate properties that reported losses between 2010 and 2018, about half of the losses — $54 million — came from depreciation, his tax records show.

Jared Kushner, Mr. Trump’s son-in-law and senior adviser, also has benefited from depreciation. The Times reported in 2018 that he likely didn’t pay federal income taxes for years, largely because he took deductions from depreciation.

In 1986, Congress reined in depreciation benefits and capped the amount of losses that real estate investors could use to offset other income.

The changes were meant to combat a proliferation of tax shelters in which investors put money into real estate partnerships that, thanks to depreciation, generated enormous only-on-paper losses that then canceled out income from other sources.

“The tax shelters were out of control,” said Daniel Shaviro, a tax professor at the New York University School of Law who worked on the Joint Congressional Committee on Taxation and helped draft the 1986 law. “Every lawyer and dentist had one.”

Knowing the real estate industry would mobilize, the congressional tax committee kept the proposed changes under wraps as long as possible. The industry “was caught flat-footed,” Mr. Shaviro said. Even so, “I knew they’d get it back thanks to their raw political power.”

It didn’t take long.

Mr. Trump, who blamed the 1986 law for a subsequent fall in real estate prices and a deep recession, was one of several developers who urged lawmakers to restore the breaks in full.

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Credit…Marcy Nighswander/Associated Press

In 1993 Congress restored those breaks. At the same time, it carved out another advantage for the real estate industry. For most businesses, canceled or forgiven debts had to be recognized as income. Real estate investors for the most part got a pass, though they had to relinquish some future deductions. Mr. Trump has benefited from those rules, such as when his lenders canceled about $270 million of debt on his Chicago skyscraper, his tax records show.

Then Mr. Trump ran for president. On the campaign trail, he acknowledged that he had been a big winner from the tax code’s favoritism toward the real estate industry. He said his expertise on the subject would help him close loopholes and make the tax code fairer.

“The unfairness of the tax laws is unbelievable,” Mr. Trump said in 2016. “It’s something I’ve been talking about for a long time, despite, frankly, being a big beneficiary of the laws. But I’m working for you now. I’m not working for Trump.”

But Republicans’ 2017 tax overhaul, which remains Mr. Trump’s signature legislative achievement, expanded and enhanced several lucrative tax breaks for real estate developers. For example, while the law barred people and companies from avoiding capital-gains taxes by selling one property and buying another, one industry was exempted: real estate.

The law was a boon to people, like Mr. Trump, who owned golf courses. It permitted real estate investors to immediately write off the full cost of various expenses, including improvements to golf courses.

In recent years Mr. Trump has also taken advantage of a tax credit that covered 20 percent of developers’ costs of rehabilitating historical structures, which is meant to encourage the preservation of old buildings.

Mr. Trump has said that he spent $200 million transforming the Old Post Office Building in Washington, a designated landmark, into a luxury hotel. That could translate into a tax credit of as much as $40 million, which Mr. Trump could use to offset his taxes for up to 20 years. (The caveat is that such tax credits reduce a developer’s ability to take other tax deductions in the future.)

Mr. Trump’s tax records show that in 2017 he used at least $1.5 million in historical preservation tax credits. That was one of the reasons his federal income tax bill that year was only $750.

The 2017 law made that tax benefit less generous, reducing it to 4 percent from 20 percent of the rehabilitation costs. But properties opened before 2017 were exempted. Mr. Trump’s hotel opened in 2016.

Russ Buettner contributed reporting.

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It’s Time to Talk About Social Security. No More Waiting.

Social Security has always seemed like a future problem, with experts long predicting a benefits squeeze in the decades ahead. But the coronavirus has put tens of millions of Americans out of work, and economists are predicting that the recovery will take years.

That means the future is now.

If nothing is done to shore up the program, all benefit checks would need to be cut by roughly one-quarter in perhaps 11 years — or, if the recession is protracted and severe, maybe even sooner.

“We thought we had more than a decade, and now it could be less than a decade,” said Kathleen Romig, a senior policy analyst at the Center on Budget and Policy Priorities. “That makes a big difference both psychologically and in policy terms.”

The pandemic has hastened the cash crunch’s arrival by wiping out jobs and the payroll taxes — Social Security’s dedicated source of revenue — that they provide. Fewer people are paying into the retirement trust fund, and the longer they’re out of work, the deeper the problem becomes. (Even more pressing may be a fix for Social Security’s disability program, which has a trust fund of its own. A report issued by the Congressional Budget Office last month projects that fund could be exhausted in 2026.)

Despite such grim projections, Social Security hasn’t received a lot of attention during the presidential campaign, given everything else going on. But whoever wins next week will have little choice but to stretch out his hand toward the third rail of politics. And both candidates have offered ideas that could significantly shift how Social Security works.

President Trump hasn’t released a proposal, but he has said he wants to eliminate the payroll tax — Social Security’s lifeblood — as an expansion of the temporary holiday enacted by executive action over the summer. (Few companies have stopped collecting the tax, which would have to be repaid in 2021.)

“At the end of the year, on the assumption that I win, I’m going to terminate the payroll tax,” he said in August. Instead, he said, he would pay for the program through the general budget, which could count on “tremendous growth.”

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Mr. Trump has stated this on more than one occasion, but Sarah Matthews, deputy White House press secretary, said the president meant only that he wants to forgive the taxes deferred under his order.

“President Trump will always protect Social Security, as he has stated numerous times,” she said.

Policy experts are highly skeptical that the payroll tax could be eliminated; it would require congressional action and be politically difficult. But if it happened, Social Security would have to compete for funding in a way it hasn’t before.

“We have a very crowded budget as it is,” said Shai Akabas, economic policy director at the Bipartisan Policy Center. “And having Social Security in the mix with everything else puts the program at risk in the future.”

Joseph R. Biden Jr., the Democratic nominee, has released a proposal that’s more moderate than many offered by his party’s progressive wing. But it would nonetheless make fundamental changes.

Mr. Biden proposes an expansion of the payroll tax, but only on the highest earning Americans. Currently, the payroll tax — 12.4 percent, split between employees and employers — applies to the first $137,700 of a worker’s earnings. Under Mr. Biden’s plan, high earners would also have the tax assessed on their earnings above $400,000. (Because the $137,700 threshold rises over time, eventually all income up to $400,000 would be subject to the tax — in about 30 years, the Urban Institute estimated.)

For decades, the amount a worker pays into the system has factored into how much they ultimately receive in benefits. But Mr. Biden has suggested that higher earners might not get anything in return for the added tax they pay, a change that would break a link that has been in place since the program began. The issue is still being studied, however, and no decision has been reached.

“A key principle of social insurance in general — and the Social Security program in particular — is that contributions are linked to benefit calculations,” said William Arnone, chief executive office of the National Academy of Social Insurance, a nonpartisan group of social insurance experts.

Even with the tax on high earners, Mr. Biden’s proposal would buy the program only an additional five years of solvency, according to the Urban Institute analysis, though it would soften the benefit cuts that would be necessary if further changes aren’t made.

Mr. Biden’s policy advisers, however, said the proposal is something of an opening bid. “The vice president’s financing proposal shows how he would protect and increase benefits for all Social Security recipients while making a down-payment on long-term solvency,” said Gene Sperling, an outside adviser to Mr. Biden and a former national economic adviser to Presidents Bill Clinton and Barack Obama.

Just about every American has something at stake, or someone close to them who does: Roughly 178 million workers contribute to the program, and, this year, an estimated 45.8 million retirees will receive nearly $70 billion in benefits — the average monthly check is about $1,500 per month, according to the Social Security Administration.

Under current law, retirement benefits can only come out of the trust fund, which will be depleted by 2034, according to Social Security Administration estimates that do not take the pandemic into account. At that point, taxes collected will be enough to pay only 76 percent of benefits. (A Congressional Budget Office report from September predicted the trust funds would run out in 2031, others, including the Bipartisan Policy Center, project it could be sooner.)

The cost of inaction is serious, Mr. Akabas said, because as insolvency creeps closer, the changes necessary will become increasingly painful — tax increases will need to be greater, any cuts more severe. “The longer we wait to fix the problem,” he said, “the fewer people who can play a role in the solution.”

About half the population 65 and older live in households that receive at least half of their income from Social Security, according to a 2017 study published in the Social Security Bulletin. Roughly 25 percent of elderly households rely on Social Security for at least 90 percent of their income.

Joyce Welch, a 73-year-old retiree in Sacramento, subsists on Social Security alone. A single mother who raised two sons, she worked full time for most of her life. But her health started to decline roughly 15 years ago because of an undiagnosed autoimmune disease, and within a couple of years, she had to retire from her job as a site supervisor and family consultant at a caregiver support center in Los Angeles.

She paid $800 a month to extend her health insurance through COBRA, which she funded with retirement savings that quickly dwindled because of early withdrawal penalties. She eventually applied for Social Security Disability, and moved in with her youngest son.

“I lost my home, my life savings, and my independence,” she said.

Her Social Security retirement check of $1,370 is deposited on the third of each month and she shops for the month at Costco and a local food co-op. By the 15th — after paying for her share of rent and other expenses — she has just a few dollars left.

Without the program, she’d have nothing. “What happened to me,” she added, “is not unique.”

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Here’s How Moving to Work Remotely Could Affect Your Taxes

If you decided to ride out the pandemic at your out-of-state vacation house or with your parents in the suburbs, you may be in for an unpleasant reality: a hefty tax bill.

Given the complexity of state tax laws, accountants are advising their clients to track the number of days they spend working out of state. Some states impose income tax on people who work there for as little as a single day.

Even before the pandemic, conflicting state tax rules were creating issues for the increasing number of people who were working remotely, said Edward Zelinsky, a tax professor at Yeshiva University’s Cardozo School of Law.

“In the last six months, this has gone from a big problem to a humongous problem,” Mr. Zelinsky said. He knows from personal experience: He lives in Connecticut but works in New York and has paid tax on his New York-based salary to both states.

You might, depending on the state and how long you have been there.

The state where you have your primary residence typically can tax your worldwide income, and any state where you earn income also has the right to tax you on the income you earn in that state, said Kirk Stark, a professor of tax law at the University of California, Los Angeles.

“That immediately creates a possibility of two separate states taxing the same income,” Mr. Stark said.

Many states offer credits for taxes paid to other states, and that may ease the burden. But if the state where you have relocated does not have a reciprocity agreement with the state of your primary residence, you could be subject to double state-income taxation.

You have less to worry about if you have relocated to one of these 13 states, which have agreed not to tax workers who have moved there temporarily because of the pandemic: Alabama, Georgia, Illinois, Indiana, Massachusetts, Maryland, Minnesota, Mississippi, Nebraska, New Jersey, Pennsylvania, Rhode Island and South Carolina, according to the Association of International Certified Professional Accountants.

Unfortunately not, unless you are prepared to move there permanently.

Navneet Garodia, 35, a financial services professional, has an apartment in Jersey City, N.J., but moved in July to his in-laws’ house in Florida so that he and his family could have more space. He plans to reduce his New Jersey tax payments to account for the days he has worked from Florida, a state that does not impose income tax on residents.

“I shouldn’t be paying the amount of taxes I am in New Jersey, and Florida has no taxes,” he said. He has taken steps to show tax authorities that he is, in fact, in Florida, such as forwarding his mail to his address there.

But Mark S. Klein, the chairman of the law firm Hodgson Russ, says it is not that simple, as long as taxpayers still have a primary residence in the state where they had been working and intend to return there. The same applies for people who have moved to the Hamptons for the last few months — they will not be exempt from New York City tax if they return to the city once the pandemic is over.

“The rule with changing your domicile is you have to leave New York City, land in a new location and stick the landing,” Mr. Klein said.

Yes. Mr. Klein said more than 50 of his clients had moved to Florida, Texas, Nevada or Wyoming since March.

“It’s not a coincidence that these are no-tax states,” he said. The other states with no income tax are Alaska, South Dakota and Washington. Many of his clients have kept their residences in California or New York, he said, but will plan to spend the majority of the year in their homes in lower-tax or no-tax states.

Kent and Ruby Santin, who had lived in Long Island City, Queens, said they were looking to buy in New York when the pandemic hit. Instead, seeking better access to the outdoors, they changed course and bought a house on Lake Tahoe in Nevada.

The lack of income tax there was also a big plus. “That was part of the decision, to be totally honest,” Mr. Santin, 30, a management consultant said.

“Federalism,” Mr. Zelinsky said. Under the U.S. Constitution, states are permitted to create their own tax rules.

“What we’ve learned in the last six months are the benefits and the disadvantages of federalism,” he said. The benefits include governors who acted responsibly in managing the pandemic who “can make up for deficiencies of the federal government,” he said.

“The disadvantages are that states are going to have 50 different tax rules.”

Auditors are persistent, especially in New York. They will want to know how many days you have been in a state and will check your phone records, your credit card receipts, your voter registration, your travel records and details indicating how permanent your second residence is, including where your children are enrolled in school.

Even the nurses who came to New York to treat coronavirus patients will be subject to New York income tax if they worked in the state for more than 14 days, Gov. Andrew M. Cuomo said in May.

“We’re not in a position to provide any more subsidies right now because we have a $13 billion deficit,” Mr. Cuomo said at a news conference.

Nishant Mittal, the general manager of Topia Compass, which offers an app to help people keep track of their whereabouts for tax purposes, said he saw a 513 percent rise in subscribers in June, compared with June last year.

He said most of his clients did not envision a situation in which they would be working from the office as much as they did before the pandemic. “At this point, it’s no secret that this is going to be a big headache,” he said.

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Trump’s Payroll Tax Holiday Order Gives Employers a New Dilemma

The White House has pitched its payroll tax holiday as a boon to American workers that would fatten their paychecks and provide a jolt to the economy. But for companies large and small, the presidential intervention poses difficult legal and logistical questions that only add to the uncertainty that executives and workers are contending with during the pandemic.

Since Mr. Trump, in an order he signed on Saturday, is only suspending the tax, not cutting it, the money that companies would cease to withhold from their employees’ earnings would have to be paid next year, barring legislative action. For companies, this would require some complex accounting maneuvering. For employees, it could mean an unwanted tax bill in 2021, making the break more of a headache.

“This is not a holiday, because there’s a bill at the other end of it,” said Isaac Boltansky, an analyst with the research firm Compass Point.

The Treasury Department is expected to release guidance about how the payroll tax suspension will work. Thus far, businesses have been cool to the idea.

“I would rather just keep paying the payroll tax as it is now and deducting from the employees,” said Arnold Kamler, the chief executive of the bicycle company Kent International. “If it does go into effect, we’ll be very upfront with the workers and tell them: ‘Don’t spend it. Just put it away.’”

The U.S. Chamber of Commerce said in a terse statement on Saturday that Mr. Trump’s executive actions, though “well intentioned,” were “no substitute for congressional action.”

The National Retail Federation has told members to be ready for additional guidance about the policy, said David French, the group’s senior vice president of government relations. “Clearly there are a lot of unresolved issues with it,” Mr. French said on Monday.

The federal government imposes a 15.3 percent payroll tax on wages, which is split evenly between employees and employers. The tax supports Social Security and Medicare. If every business in the United States deferred the Social Security payroll taxes that they withhold for their workers to the end of the year, up to $40 billion a month would be added to the paychecks of Americans, JPMorgan Chase said in a research note on Monday.

But it is far from certain that many companies or workers will take the White House up on this offer, which experts said would be logistically difficult for the Treasury Department to force on them.

“Since employees must still pay those taxes next year, this order is really an offer of a zero-interest loan rather than an actual reduction in tax liability,” said Michael Feroli, economist at J.P. Morgan. “It remains quite unclear whether employers will actually change withholding schedules, particularly if it could lead to financial uncertainties in 2021.”

Because questions about the constitutionality of the policy persist, businesses are likely to hold off any decisions at least until the government provides additional guidance. On Monday, several large corporations declined to say what they would do, because they wanted the Trump administration to provide more details first.

“We’re awaiting guidance from the U.S. Treasury Department on the payroll tax deferral, and we’ll make decisions on implementation once that’s been provided,” said Randy Hargrove, a spokesman for Walmart, the country’s largest private employer, with 1.5 million workers.

One option some employers might consider is to withhold the tax and repay workers later if it is eventually forgiven. But that would defeat the purpose of stimulating the economy now, when it could use the help.

If businesses are reluctant to reduce withholding because they may be liable to pay the tax later, they “might escrow the withheld amounts rather than pay the Treasury, and assure their employees that if the payroll tax liability is eventually forgiven by an act of Congress, the business would cut the appropriate check to their employees,” said Itai Grinberg, an international tax policy professor at Georgetown University Law Center.

Payroll experts said many businesses would be hesitant to do anything until they had assurances from Congress that they and their employees wouldn’t have to make good on the deferred taxes next year.

“It’s a little bit of a risk that Congress may not act, and if you’re deferring a significant amount of taxes the reality is, a few months later, you’re going to have to come up with that cash and pay those taxes,” said Pete Isberg, vice president of government relations for ADP, a payroll specialist that serves more than 800,000 businesses.

The rollout itself may be expensive and time consuming for businesses. The payroll tax rate does not usually change in the middle of the year, Mr. Isberg said, and the shift would require businesses to reprogram computer systems that can be balky.

“Things of this magnitude normally take six months or so for orderly programming,” Mr. Isberg said. “So there will be some employers that just never get this done just from a technical perspective if they have systems that are old or difficult to maintain.”

In addition, by focusing on people who are employed, the measure fails to address the needs of the roughly 16 million Americans without jobs, some of whom are on the verge of losing their homes and cars.

“I don’t think it helps the economy,” Mr. Boltansky said. “I think that it’s a headline benefit for the Trump administration.”

Some groups, like AARP, contend that Mr. Trump’s order could scare older Americans who rely on Social Security and Medicare into thinking that lawmakers will reduce or alter their benefits to make up for the forgone tax revenue. That, in turn, could affect how those people spend and save money now.

“Social Security is more crucial than ever as Americans face the one-two punch of the coronavirus’s health and economic consequences,” AARP said in a statement on Saturday. “But this approach exacerbates people’s already-heightened fears and concerns about their financial and retirement security.”

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Stock Investors Worried About Biden Presidency

After months of fixating on the pandemic, Wall Street has something new to worry about: a possible Biden presidency.

With the latest polls suggesting that former Vice President Joseph R. Biden Jr. has built a commanding lead over President Trump in the 2020 race, investors have begun to take into account that the not-too-distant future could look very different from the business-friendly thrust of the current administration. And it’s making some nervous.

Investors aren’t yet making buying and selling decisions based on the eventuality of a Biden administration, so the market’s dips and rallies don’t fully reflect their worries. But there are clues.

On June 24, when the market dropped 2.6 percent during a broad-based rise in coronavirus infections, some Wall Street traders and analysts attributed part of the fall to data from polls — including one produced by The New York Times and Siena College — showing Mr. Biden’s lead over Mr. Trump.

Of course, no one can ever be entirely sure what moves a market. But stocks of some military companies have also underperformed, reflecting a view among some investors that a Biden victory could depress weapons sales.

And Wall Street analysts, who provide market research to hedge funds, asset managers and other big investors, say those clients are increasingly seeking their advice on the impact of a Biden presidency, especially on taxes.

Recently, inquiries from investors about Mr. Biden’s lead in the polls have focused almost exclusively on the issue of taxes, said Jonathan Golub, chief U.S. equity strategist at Credit Suisse. “That’s, right now, kind of the market’s focus,” he said.

On June 29, Mr. Biden, the presumptive Democratic nominee, told potential donors at a virtual fund-raiser attended by Wall Street people that he would roll back most of Mr. Trump’s $2 trillion tax cut, “and a lot of you may not like that.”

Additionally, public opinion has swung in a way that indicates that Democrats, who control the House of Representatives, have a stronger chance of retaking the Senate come November. Such unified control could mean a sudden shift away from a range of policies — like corporate tax cuts, deregulation and weapons sales to foreign governments — that have helped push up stock prices in recent years.

“The market is starting to worry that Trump will not be re-elected,” said Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets. “Trump is consistently viewed as a positive for the stock market.”

Stock market investors have done well under Mr. Trump. The S&P 500 is up more than 45 percent since his election on Nov. 8, 2016, despite periods of sharp volatility, including one in recent months as the pandemic led to an enormous market sell-off, followed by a robust return on the back of giant helpings of government stimulus.

It wasn’t always this way. The shock of Mr. Trump’s election jolted investors at first. After his victory, stock market futures plunged more than 5 percent in overnight trading. But investors didn’t take long to adjust to the prospect of unified Republican control of the federal government, which lasted until the 2018 midterm elections and introduced a number of deregulatory and tax policies deemed favorable to the markets.

Now, stock market analysts and investors are trying to figure out which of those policies could come to an end if Mr. Biden goes to the White House. Among Mr. Biden’s policy proposals are a partial reversal of the Trump administration tax cuts signed into law in late 2017. Those cuts, for both individuals and businesses, were some of the most sweeping changes to the tax code in decades.

In particular, the Trump tax cuts were a windfall for major American corporations, helping to drive up the profitability of companies in the S&P 500 more than 20 percent in 2018. While the Trump administration promoted the tax cuts as a way to increase incentives for companies to invest and drive wage gains, many companies used their savings to buy back their shares — increasing the wealth of their shareholders by billions of dollars in the process.

At last month’s fund-raiser, Mr. Biden detailed his plans, which include raising the corporate tax rate to 28 percent from 21 percent, according to a pool report.

A recent analysis of Mr. Biden’s tax plan from Goldman Sachs suggested that if enacted, his corporate tax increase would cut the earnings per share of S&P 500 companies about 12 percent, a prospect that could act as a headwind for stocks.

“It’s becoming a hotter topic the more the polls come out showing that Biden is in the lead,” said Tony Dwyer, chief market strategist with the brokerage firm Canaccord Genuity in New York. “The more that Biden is up, the more that people are going to start to think about what that means for taxes.”

The stocks of military companies, which are viewed as beneficiaries of the Trump administration’s push to sell weapons to Saudi Arabia, have lagged the market as Mr. Biden’s fortunes have risen in polls.

“We see higher risk around weapons sales to the Middle East, and especially Saudi Arabia, in a Biden administration,” military stock analysts at JPMorgan Chase wrote in a recent note to clients.

Investors in the oil and gas industry have also raised questions with analysts about what a change in the White House would mean for energy companies, from access to federal lands for drilling to increased carbon regulation of refiners. In a research report issued late last month, Goldman Sachs analysts noted that many of their conversations with investors focused on the risks to oil and gas companies in the event of a Democratic victory in November.

Still, industries such as health care and technology, which were some of the biggest beneficiaries of the Trump tax cuts, don’t appear to be drastically underperforming the market.

Some analysts have noted that a Biden presidency could be a source of stability for the markets, which have been hammered at times during Mr. Trump’s tenure. Since 2018, his on-again, off-again trade, tariff and technology war with China has generated waves of volatility for stocks.

“A Biden presidency would result in less trade tension with China, which would be a welcome relief for equity investors,” economists at BCA Research wrote. They also noted that corporate tax increases could finance government spending that would stimulate the economy, a potential plus when the post-pandemic recovery looks slow and long.

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There’s Money Stuck in Your Dependent Care Account. Now What?

You did everything right. You read the email from human resources and signed up for a dependent care account. Your employer siphons pretax money from your paycheck, and you’ll get a little back upon request after paying each day care bill, or in a lump sum after covering summer camp costs.

Except now your day care is closed, and there may not be summer camp. You have locked away four figures of money that you may not be able to get back, since if you don’t use it before the end of the year, you lose it entirely and your employer gets to keep it.

In the broad scheme of things — a pandemic, tens of millions of people with no job at all — it may not seem like a big thing. But there are an estimated 5.2 million dependent care accounts, according to the financial research firm Aite Group, and many of their holders have lost at least some income or have spouses who have.

Forfeited funds can translate to that much less money available to donate to people in need or spend at struggling local businesses. And, unless something changes, anyone who forfeits money will have to shell out extra cash: If you leave $1,000 behind and it didn’t go to its intended tax-advantaged purpose, you’ll have to pay taxes on it.

It’s a big enough problem that legislators in Washington are now trying to solve it. But first, a brief reminder on how these accounts are generally supposed to work when things are more normal, which I prepared with an assist from Jody L. Dietel. She’s a senior vice president at HealthEquity, which owns an administrator called WageWorks, and is a 30-year veteran on the tax-advantaged workplace benefits plan scene.

It starts with $5,000 for all care, right?

Potentially. Employers are the ones that offer dependent care accounts, so you have to have an employer in the first place and it needs to choose to offer one. Mercer, which does employee benefits consulting, said 84 percent of employers with over 500 workers offered the accounts the last time it examined the matter, in 2017.

Your employer decides how much money you can set aside, up to a legal limit of $5,000. That generally comes out in equal chunks, check by check, throughout the year. After the care happens and you pay for it, you submit a receipt for reimbursement (unless your account administrator is able to pay the care provider directly).

Many kinds of care count, as long as it’s the sort of care that allows you to work. Day care, nursery school, after-school programs and summer camp all qualify, if it’s for a child 12 or under. If you pay for in-home child-care and you and the provider report the income, that works, too. Also allowable: care for disabled spouses and older family members. (Check Internal Revenue Service Publication 503 under “Who is a Qualifying Person?” for all the conditions and details.)

Camp was canceled. Can I just take my money back?

No. There’s no legal way to just bust it out and pay taxes on it.

OK, but my job was just canceled. Can I have my money back under those circumstances?

Unfortunately, no.

Still employed here. Can I at least stop contributing?

Maybe.

Normally, you’re not supposed to be able to change the set-aside from your paycheck during the year. But the rules allow for exceptions when you’ve experienced a qualified change in status. According to Ms. Dietel, plan administrators tend to be flexible in their reading of the regulations here.

Indeed, the federal government, which itself has many employees using dependent care accounts, has already signaled that participants can halt their plan contributions. They can do this as long as they or their spouses have had some kind of change in job status (which could include a change in the location where they work) or there has been some kind of change in the cost or coverage for dependent care.

Under those terms, most people would qualify. Ask your human resources representative for help if you want to make a change.

OK, but I still have $1,700 in the account now that I’ve stopped contributing. What’s the hack here? Please tell me there’s a hack.

First, check for reimbursable expenses you might have missed. Some people keep things simple by using their money for one big expense — say, summer camp. That way, there is only one reimbursement or web form to fill out.

So perhaps you’ve forgotten about after-school or elder care that you paid for in February. Was any of it eligible? If so, get some receipts and submit them.

Also, your need for care may not have gone away, even if the entity that was going to provide it is closed down. If you’re working from home and your child’s school is closed, the need might have gone up.

Unfortunately, you can’t use money from the account to pay your 14-year-old to watch your 4-year-old while you work. (Yes, I asked, and Ms. Dietel laughed at me, or maybe it was with me.) But you could use it to pay your 14-year-old’s best friend. You can even use it to pay a relative who is not a dependent of yours.

As always, this needs to be totally above board — the caregiver would need to provide an invoice or sign a reimbursement form with a Social Security number on it and all of that.

What if I have no expenses to submit and won’t for the rest of 2020?

You’ll lose any money you’ve set aside, though some companies allow a grace period for a few months into the next year. So if you anticipate some new expenses in early 2021, that might work out for you.

None of this seems right. Will Congress fix it?

Maybe. The National Taxpayers Union is lobbying for changes. A spokesman for the Senate Finance Committee said it was aware of the issue; lawmakers are working with the Treasury Department to see what it might do to provide relief and whether any legislative fix is required.

Last month, Representative Brad Wenstrup, Republican of Ohio, and a bipartisan group of colleagues including Representative Tom Suozzi, Democrat of New York, wrote a letter to the I.R.S. and Treasury asking that people be able to carry over unused dependent care (and health care flexible spending account) money into 2021.

But I don’t know that I would count on it happening. At the very least, consider halting your contributions now if you think there is no chance you will use any additional money for care — or could make better use of the money now.

If and when you do get the money back, if you can afford to, consider treating it the way that some people have for years — as a surprise bonus that lets you help people who aren’t lucky enough to have any employer at all, let alone one laden with tax-saving benefits plans.

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Where is My Stimulus Payment? Here’s What You Need to Check.

It’s been weeks since people started getting coronavirus relief payments. You’ve checked and rechecked your eligibility, just to be sure.

But still, no $1,200 stimulus payment has arrived in your bank account or mailbox. Perhaps $3,400 is riding on this for you, your spouse and your two children, for whom you’re supposed to get $500 each.

Tens of millions of people have already received their payments, but many others are still waiting or wondering. There are a lot of reasons you could be among them, even if the government has removed some of the hurdles it initially set up.

So what do you do if yours hasn’t arrived?

A couple of weeks ago, the I.R.S. introduced its “Get My Payment” tool to help people figure out when and how their money might be arriving. The unveiling didn’t go so well: Many users did not realize how picky the site was about, say, entering an address that precisely matched the one on their most recent tax return.

Also, there were lots of confusing messages indicating that there was no information available at all. Things have improved some since then, and the I.R.S. is updating the information once each day, usually in the middle of the night.

You may need information from recent tax returns at the ready to use the tool, and it doesn’t work for recipients of Supplemental Security Income and Veterans Affairs benefits.

People who don’t usually file a tax return should give the I.R.S. an assist.

If you haven’t had to file a return because your gross income did not exceed $12,200 ($24,400 for married couples), you still qualify for a payment. But if you’re not a recipient of S.S.I. or V.A. benefits, you should fill out a special form for non-filers.

The government is also crosschecking all the Social Security and V.A. databases and issuing payments to those recipients for whom it does have bank account or similar information, but that process can add time.

But May 5 is an important deadline: S.S.I. and V.A. beneficiaries who didn’t have to file a tax return in 2018 or 2019 and have children age 16 or under should register online with the I.R.S. non-filer tool to get the $500 per child payment more quickly.

One known quagmire: If you filed taxes in 2018 or 2019 with the help of a third-party company, you may have taken advantage of something called a refund anticipation loan. The company may have set you up with a temporary account to process the loan and give you access to that money.

The bank information the I.R.S. has for you may be for that account, which may be closed at this point. That means that when the I.R.S. tries to deposit the stimulus money there, the process will break down.

At that point, the I.R.S. is supposed to send a paper check to the address on the most recent tax return, or one on file with the U.S. Postal Service.

You should be able to track this whole messy process using the “Get My Payment” service, but it could take several more weeks to get your payment.

A lot of money is flowing right now, so people will indeed try to steal it. The I.R.S. knows this, so 15 days after it issues your payment, it is supposed to send confirmation letters to the most recent address it has on file for you.

That letter should explain exactly how the I.R.S. made the payment. If you haven’t received the money yet, that’s the time to worry about whether someone else took it. The letter will contain contact information for the I.R.S. if you need help.

For any number of reasons, the I.R.S. may not have up-to-date information — or any at all — about your address or bank account. For instance, plenty of people don’t trust the I.R.S. with their checking account information for direct deposits or payments. Instead, they pay tax bills with paper checks and collect refunds that way, too.

If you’re in that category but are willing to change your approach, you may be able to get your payment more quickly. If the government hasn’t already started the process of sending you a paper check, it may still be possible to enter your checking account information via the Get My Payment tool to get your money more quickly.

People with higher incomes might not get a payment. The $1,200 payment decreases until it stops altogether for a single person earning $99,000 or a married couple who have no dependent children, file their taxes jointly and earn $198,000. And if someone else claimed you as a dependent, you don’t get a check.

The agency got off to a pretty slow start in explaining how things would work, but it has now answered 38 questions in its F.A.Q. It’s also published a chart to help you figure out what, if any, additional information you may need to hand over to receive a payment or get one more quickly.

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The Tax-Break Bonanza Inside the Economic Rescue Package

As the federal government dispenses trillions of dollars to save the economy, small businesses and out-of-work individuals are jostling to grab small slices of aid before the funds run out.

But another group is in no danger of missing out: wealthy individuals and big companies that are poised for tax windfalls.

As part of the economic rescue package that became law last month, the federal government is giving away $174 billion in temporary tax breaks overwhelmingly to rich individuals and large companies, according to interviews and government estimates.

Some of the breaks apply to taxes have long been in the cross hairs of corporate lobbyists. They undo limitations that were imposed to rein in the giveaways embedded in a $1.5 trillion tax-cut package enacted in 2017. None specifically target businesses or individuals harmed by the coronavirus.

One provision tucked into the federal economic-rescue law increases the amount of deductions companies are permitted to take on the interest they pay on large quantities of debt. Only companies with at least $25 million in annual receipts can qualify for that break.

Another change lets people deduct even more of their businesses’ losses from any winnings they reaped in the stock market, sharply reducing what they owe in capital gains taxes. Only households earning at least $500,000 a year — the top 1 percent of American taxpayers — are eligible.

And yet another provision in last month’s rescue package allows companies to deduct losses in one year against profits that they earned years earlier. The tax break most likely won’t put any extra cash directly into the hands of companies hit by the current crisis for at least a year.

The bottom line is that, barely two years after congressional Republicans and President Trump lavished America’s wealthiest families and companies with a series of lucrative tax cuts, those same beneficiaries are now receiving a second helping.

Many of the tax benefits in the stimulus are “just shoveling money to rich people,” said Victor Fleischer, a tax law professor at the University of California, Irvine. While the 2017 tax-cut package was a bonanza for big companies and wealthy individuals, in order to keep the law’s overall costs down it imposed a number of restrictions on who could take advantage of certain tax breaks and how much those taxpayers could reap.

Now, with the 2020 stimulus package, Congress has temporarily repealed a number of those limitations.

“Under the cover of the pandemic, they are undoing the perfectly sensible limitations” that moderated the size of the 2017 tax cuts, said H. David Rosenbloom, a corporate tax lawyer at Caplin & Drysdale and head of the international tax program at New York University’s law school. “And taking into account the giveaways in that act, it’s a joke.”

Senator Charles Grassley, the Iowa Republican who is chairman of the Senate Finance Committee, defended the changes. The stimulus law “threw a much-needed financial lifeline to businesses of all sizes, types and industries to give them the best chance to survive,” he said. He added, “The attempt to paint these bipartisan tax provisions as a boon for particular industries or investors completely misses the mark.”

One of the breaks temporarily rolls back the 2017 restriction on how much debt some companies can deduct from their taxes. That restriction was the subject of lobbying for the last two years by big companies, including Coca-Cola and Hewlett Packard Enterprise, according to federal lobbying records. The National Association of Manufacturers, whose board includes executives from Exxon Mobil, Raytheon, and Caterpillar, has pushed lawmakers for similar changes.

Earlier this month, the Joint Committee on Taxation, a nonpartisan congressional body, found that the two other breaks — those that allow people to deduct only-on-paper losses from their tax bills — would go largely to people making at least $1 million a year.

That analysis came in response to requests by the Democratic lawmakers Representative Lloyd Doggett of Texas and Senator Sheldon Whitehouse of Rhode Island. On Tuesday, Mr. Doggett introduced legislation that would roll back major chunks of the tax breaks. Among other things, it would no longer let people who earn more than $500,000 to immediately deduct all of that year’s business losses from their capital gains.

“Tax giveaways for a wealthy few shouldn’t have come near a coronavirus relief bill,” said Senator Whitehouse, who plans to introduce a Senate version.

The biggest tax break permits wealthy investors in, say, the real estate or energy businesses to use only-on-paper financial losses — such as from writing down, or depreciating, the value of assets — to reduce the taxes they owe on profits from stock market investments.

The provision does not single out real estate. But the industry is well known for generating tax losses from depreciation even in profitable years.

The 2017 tax-cut law limited the ability to use those losses. A married couple could shelter only the first $500,000 of their nonbusiness income — such as capital gains from investments — in the year that the loss was generated. Any leftover losses would be rolled over into future years.

The stimulus undoes those restrictions for this year and, retroactively, for 2018 and 2019 — meaning that wealthy households will be able to shield far more of their capital gains from taxation.

The 2017 law also restricted the ability of companies to use so-called net operating losses — which are losses that companies report on their tax returns, even if they are otherwise profitable — to reduce their tax bills. (Net operating losses can include expenses that are only for tax purposes and that don’t reduce profits reported to shareholders.) No longer could such losses from one year be used to retroactively cancel out profits accumulated in previous years, thus generating tax refunds.

The new law temporarily undoes that restriction, enabling companies to use losses in one year to get refunds for previous profitable years.

Big companies, including Morgan Stanley, have lobbied on issues relating to such tax losses as recently as the first few months of this year, according to records compiled by the Center for Responsive Politics.

Among the problems with this tax break, critics say, is that it isn’t aimed at the companies hit by the coronavirus pandemic. Under the new law, companies that will suffer big losses in 2020 won’t be able to use those losses to obtain refunds until they file their tax returns at least a year from now.

The provision will quickly put cash into a company’s pockets if it had tax losses from 2019 or earlier — well before the pandemic — that can be applied against profits from preceding years.

“There’s no reason to send money in a blanket form to all the companies that have net operating losses,” said Mr. Fleischer. “We have some amazingly successful companies that don’t pay tax and have net operating losses, and there’s no reason to be subsidizing these companies or expect that money will find its way down to the employees.”

The tax breaks for companies that report losses are likely to be especially lucrative because the 2017 tax law created new deductions that could generate large paper losses — for tax purposes only — for otherwise profitable companies in 2018 and 2019. For example, the 2017 law permitted companies to fully write off certain types of investments in the first year, instead of stretching those deductions over several years. That, in turn, meant companies could report profits to their shareholders but losses on their tax returns.

A third break, worth more than $13 billion over a decade, temporarily loosens 2017 restrictions on how much interest big companies can deduct on their tax returns. Private equity firms, which rely on borrowed money to generate big profits, have been urging the Treasury Department to write favorable rules governing the restrictions on how much interest on their debt companies can deduct from taxes.

The private equity industry is poised to benefit from the rescue package. Companies with at least $25 million in annual revenue are now eligible to deduct more interest from their tax bills — a change that will make the private-equity business model even more lucrative. Private equity firms amplify their profits by using borrowed money to finance their investments. Deducting even more of the interest on that debt from their taxes would further boost their profits.

The tax break “allows private equity to swoop in and scoop up struggling businesses,” said Matthew Rappaport, a tax lawyer who specializes in private equity at Falcon Rappaport & Berkman in New York.

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You Have an Extra 3 Months to File Your Taxes. Should You Wait?

The government has granted everyone an extra three months to file — and pay — their 2019 federal income taxes because of the coronavirus turmoil. Whew! It helps to have wiggle room in uncertain times.But just because you have more time, should you take it?If you’re owed a significant tax …

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Needy Will Face Hurdles to Getting Coronavirus Stimulus

In the sweeping economic recovery package that Congress passed last week, the federal government promised payments of up to $1,200 to most American adults, including those with little income or none at all.But many of those most in need of help will face hurdles to getting the money they’ve …

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