Business Frame Weekly – Artificial intelligence has been one of the defining themes for stocks in 2023/ The American Institute of CPAs (AICPA) Foundation awarded $970,000 in academic scholarships to 195 students

Artificial intelligence has been one of the defining themes for stocks in 2023 – and it's also helping the rich get richer.

The American Institute of CPAs (AICPA) Foundation awarded $970,000 in academic scholarships to 195 students for the 2023-2024 academic year through the AICPA Legacy Scholars Program.

Taking advantage of the return of capital and Tax Cuts and Jobs Act rate reductions can significantly reduce taxes on REIT distributions.

In this newsletter:

• The world's wealthiest people have seen their fortunes grow by more than $150 billion thanks to the AI-fueled stock-market boom
• AICPA awards more than $900,000 in scholarships to aspiring CPAs
• These Two Tax Laws Make REITs More Tax-Friendly
• Harvard Economists Offer Economic Analysis of IRS Tax Audits
• The 7 U.S. cities where a $250,000 salary is worth the least — New York is No. 1
• IRS updates list of automatic accounting method changes

June 20, 2023

The world's wealthiest people have seen their fortunes grow by more than $150 billion thanks to the AI-fueled stock-market boom

Artificial intelligence has been one of the defining themes for stocks in 2023 – and it's also helping the rich get richer. The surge in interest in the intelligent language tool ChatGPT quickly spread across markets, with big-name investors rushing to snap up shares in companies they believe could power AI's rise to prominence. Big Tech giants like Meta Platforms and Nvidia have already racked up triple-digit gains thanks to the AI boom, while Microsoft, Google parent Alphabet, and Oracle have also all surged. That's helped the companies' founders – already among the world's richest people at the start of 2023 – to become even wealthier. Meta shares have rallied 134% year-to-date thanks to both the rise of AI and Zuckerberg's so-called "year of efficiency" cost cuts, and that's lifted the Facebook founder's wealth by over $57 billion, per the Bloomberg Billionaires Index.

AICPA awards more than $900,000 in scholarships to aspiring CPAs

The American Institute of CPAs (AICPA) Foundation awarded $970,000 in academic scholarships to 195 students for the 2023-2024 academic year through the AICPA Legacy Scholars Program. The AICPA Foundation was established in 1922 to advance the science of accountancy and accounting education. For more than 100 years, the Foundation has focused on supporting the next generation of CPAs through accounting education and outreach, scholarships and fellowships, and diversity and inclusion.

These Two Tax Laws Make REITs More Tax-Friendly

Taking advantage of the return of capital and Tax Cuts and Jobs Act rate reductions can significantly reduce taxes on REIT distributions. I never recommend an investment solely for the tax benefits. It must be a good investment and be suitable for the client. If an investment makes sense as part of a diversified portfolio and can provide tax benefits, then it is a win-win. Real estate is one example. Investors can own real estate in their investment portfolio through a REIT, or a real estate investment trust. REITs can own apartment buildings, student housing, warehouses, data centers, medical buildings, office buildings and other types of real estate. Like any investment, REITs have their pros and cons. REITs can provide diversification—for example, from 2000-2020, REITs helped improved the performance and diversification of stock-bond portfolios, according to one study by TIAA-CREF. REITs can act as an inflation hedge to protect savings—real estate owners can increase rents. REITs can also have a high distribution yield.

Harvard Economists Offer Economic Analysis of IRS Tax Audits

The paper finds that for every $1 the IRS spends auditing high-income taxpayers, it yields more than $12 in revenue, and audits of lower-income taxpayers yields $5 in revenue. Is there a certain aura around an audit? A new paper from economists at Harvard, the university of Sydney, and the Treasury Department appears to suggest so—at least for Uncle Sam. The paper, titled “A Welfare Analysis of Tax Audits Across the Income Distribution,” finds that for every $1 the Internal Revenue Service (IRS) spends auditing taxpayers above the 90th percentile of earners, it yields more than $12 in revenue, and audits for below-median income taxpayers yields $5 in revenue. The paper also discusses how the IRS estimates that there are more than $500 billion unpaid tax obligations each year, and that those obligations are mostly among the top earners. As such, when the IRS audits those earners, it’s able to claw out some of that money

The 7 U.S. cities where a $250,000 salary is worth the least — New York is No. 1

Only 7% of American households earn $250,000 or more. For those high-income earners, however, certain cities will offer them the most bang for their buck — and others will offer far less. The real purchasing power of a $250,000 salary depends on a city’s overall economy, taxes and cost of living. Across the United States, $250,000 is worth as much as $203,664 in Memphis, Tennessee, but as little as $83,000 in New York City. That’s according to a recent report by SmartAsset, which investigated where high earners lose the most to taxes and cost of living. The study compares the after-tax income in 76 of the largest U.S. cities and adjusts the figures for the cost of living.

IRS updates list of automatic accounting method changes

In Rev. Proc. 2023-24, the IRS on Thursday provided a comprehensive, updated list of changes in tax accounting methods to which the automatic change procedures in Rev. Proc. 2015-13, as subsequently modified, apply. Rev. Proc. 2015-13 itself updated and revised prior general procedures under Sec. 446(e) to obtain the IRS's consent to obtain automatic and advance nonautomatic consent to change a method of accounting. It has since been modified by Rev. Procs. 2015-33, 2016-1, 2017-59, 2021-26, 2021-34, and 2022-14. The method changes in Rev. Proc. 2023-24 are arranged in 32 sections by Code section, covering a broad array of tax accounting methods. It makes almost 30 significant changes to the list of automatic changes in Rev. Proc. 2022-14, many related to depreciation and amortization or uniform capitalization methods.

Random Ramblings

• Who Pays My Property Taxes When I Die?
• LGBTQ employees are heading for a 'retirement crisis'.
• What to know about the tax deductibility of funeral expenses?
• Here’s how much money it takes to be considered ‘financially comfortable’ in 13 major U.S. cities.
• These tax cuts and jobs act provisions may sunset soon.
• It takes a lot less money to feel wealthy than to be it, survey finds.