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Week in Insights: What Goes On Under the Surface Is a Mystery

May 22, 2022, 2:00 PM

I was pretty excited to see that May 22 marks the anniversary of the day in 1933 when Aldie and John Mackay saw “something resembling a whale,” marking the first modern sighting of the Loch Ness Monster.

Except that a May 2, 1933, report in the Inverness Courier says a local couple claimed to have seen “an enormous animal rolling and plunging on the surface” in April of 1933.

And another recounting suggests that a couple witnessed the first modern sighting when “a most extraordinary form of animal” crossed the road in front of their car on July 22, 1933.

It seems that the reported first sightings of the famous monster, affectionately called Nessie, are as reliable as the descriptions.

To resolve the mystery, the London Daily Mail hired an actor, film director, and big-game hunter named Marmaduke Arundel Wetherell (yes, really) to produce proof that Nessie really existed. Wetherell didn’t disappoint, bringing plaster casts of large footprints back to the Natural History Museum in London. Unfortunately, the museum pronounced the prints fakes—made with a stuffed hippo foot.

A view of the Loch Ness Monster, near Inverness, Scotland, April 19, 1934.
Photographer: Keystone via Getty Images

A 1934 photo of the Loch Ness monster—probably the most famous to date—generated enormous interest from those seeking the elusive monster. The photo, allegedly taken by Robert Kenneth Wilson while on a fishing trip with his friend, Maurice Chambers, was a hoax. After Chambers died in 1994, his papers confirmed that the “monster” was actually a wood and plastic sculpture attached to a toy submarine. And the photo? It wasn’t taken by Wilson at all, but by Wetherell.

Despite the confirmed hoaxes, more than 4,000 sightings of Nessie have been reported. And, according to Scotland’s national tourist board, “Nessie does really exist.”

So why does the legend endure? Perhaps we’re fascinated with the idea that there’s something we can’t fully explain. In photos and videos, we only see a little bit of what’s above the surface of the lake—maybe we like the idea that we can only imagine what’s happening below. The mystery is the fun part.

But in the tax, legal, and accounting worlds, we like it when we can see the whole picture—any missing bits are scary, not exciting. Fortunately, our goal at Bloomberg Tax is to help you sort it all out. We help you stay informed with great commentary and insightful analysis on federal, state, and international tax issues—no additional sleuthing required.

The Exchange ... It’s where great ideas intersect.

—Kelly Phillips Erb

Quick Numbers Trivia

In 2018, Gary Campbell, keeper of the Official Loch Ness Monster Register and a Chartered Accountant, estimated that Nessie and Loch Ness tourists contributed how much to the Scottish economy every year?
Answer at the bottom.

Our Roundup

Our experts touched on a wide range of topics, from ESG to international tax planning for multinationals. For a look at what’s making news, here’s our roundup.

Environmental, Social, and Governance

ESG reporting is of growing importance to regulators, investors, and companies, say Stout’s Anthony Sommer, Katelyn Horowitz, and Ashley Ross in What ESG Is, Why It’s Important, and Where It Might Be Going. Further developments in this space are extremely likely as the emphasis on ESG grows in the marketplace.

Nonprofits & Charitable Giving

The IRS could help boost donations to charity if it allowed Americans to increase deductions for charitable giving on their federal income tax, says Commissioner Kenneth Hodder, the national commander of the Salvation Army, in How the IRS Can Unlock the Tax Code to Open American Generosity.

Estate and Gift Tax Planning

In The Future of International Tax Planning For Multinationals, Martin Arzethauser of Kuehne+Nagel Management AG, and Daniel Lehmann and Anke Stumm of Bär & Karrer discuss the issues and challenges facing multinational enterprises in tax planning in light of recent moves to reform the international tax system.

Cryptocurrency gift recipients who reside in France should also determine their potential gift and inheritance tax exposure before accepting any gift or bequest from a US tax resident, says Orsay Avocats Associés tax partner Claire Guionnet-Moalic in Potential Crypto Gift Tax Exemption From US to French Resident.

Members of the Loch Ness Monster Investigation Team scan the loch for a sighting of the monster.
Photographer: Fox Photos via Getty Images

Global Economies

Recent developments suggest that the member countries of the OECD-led Inclusive Framework on BEPS may not share the same understanding of what was supposedly agreed to in October 2021. Jeff VanderWolk of Squire Patton Boggs discusses the current causes of uncertainty and asks, What Exactly Did the Inclusive Framework Agree to Last October?

Thierry Lesage and Marie Demmerlé of Arendt & Medernach analyze the reasoning in a recent Luxembourg case in which the Administrative Court considered whether contributions to a “115 account” are part of the acquisition price of a participation in the context of the Luxembourg participation exemption regime. In Luxembourg Administrative Court Takes an Unexpected Stance on Participation Exemption Regime, they comment that the decision in the case is totally unexpected and raises several practical questions.

Phelippe Toledo Pires de Oliveira of the Office of the Attorney General for the National Treasury looks at a recent initiative by the Brazilian tax administration to resolve a longstanding dispute with taxpayers, and in Goodwill Amortization—The End of a Longstanding Tax Dispute in Brazil?, explains the requirements to qualify for the newly announced tax settlement agreement.

Federal Issues

The emergence of investing in popular culture has led to a steadier stream of new investors. As investors continue to experience gains for the first time amid this wave, some of their behavior might suggest they weren’t aware of the tax implications of their investments, say OVTLYR’s Mark Gorzycki and Mahesh Kashyap in First-Time Investors Will Continue Making Tax Season a Challenge.

TurboTax’s groundbreaking free do-it-yourself offer for simple tax returns forced competitors to level up, says DiGo’s Mark DiMassimo in TurboTax, From Consumer Darling to the Crosshairs of the FTC. Now the FTC is suing TurboTax, which could face tens of millions of dollars in fees and fines.

What can be done to ease and shorten the tax filing process? It’s time to fund the IRS, embrace technology, streamline, and shift expectations, says tax and technology attorney Andrew Leahey in This Year, Filing Taxes Will Claim 1,262 American Lives—Sort Of.

State and Local Tax

The tax on menstrual products in Texas is bad administrative law, bad constitutional law, and bad policy, say Baker Botts attorneys Meghan McElvy and Laura Shoemaker McGonagill in Why the Texas Tampon Tax Fails at Every Level and Needs to End.

Equating nonprofit with tax-exempt may be accurate when considering federal and state income taxes. But, attorney Dawn R. Gabel of Dickinson Wright PLLC says: Nonprofit Doesn’t Mean ‘Not Taxable’ for Many State, Local Taxes.

Reader Responses

At The Exchange, we welcome responses from our readers, and encourage diversity and civil discussion. We are especially interested in responses that add to the conversation, or introduce a different point of view. If you have a response to one of our published Insights, we’d love to hear from you. Here’s how to submit a response.

A Closer Look

With the heightened gift and estate tax exclusion amount seemingly safe for the next four years, and with interest rates and inflation running hot, should clients and their advisers think differently about the exclusion in 2022 than they did in 2021? In our latest edition of “A Closer Look,” Bernstein Private Wealth Management’s Andrea Kushner and Thomas Pauloski share their thoughts on the gift and estate tax exclusion.

Columnists

As a professional, it’s not unusual to be asked, “Can I pick your brain?” And it can be hard to say no. But it can also be exhausting to say yes. Before you offer a response, here are a few questions to consider.

In a conversation with Bloomberg Tax this week, Kate Barton, global vice chair of EY, noted that companies are increasingly looking for individuals who can take over newly created roles—like a “sanctions czar” related to government sanctions on the war in Ukraine. So what’s the best course of action to keep up with demand? More education, training, or volunteering—and a bit of forecasting from your end—may be the path forward.

Listen In

Automation tools increasingly used by seasoned tax professionals are helping to take some of the pain and manual labor out of routine compliance work.

On this episode of Talking Tax, John McGowan, the CEO of Hubsync and former chief information officer for two Big Four tax practices, talks to Bloomberg Tax Reporter Amanda Iacone about the challenges that firms face in adopting new ways of working and how automation can not only help get work done faster but could make CPA firms more attractive to job candidates and clients alike.

Student Writing Competition

Do you have an original take on current events and issues in tax practice and policy—but you’re not yet a tax professional? Our second annual tax writing competition is the perfect opportunity to show off your work: The competition is intended to highlight the very best of student writing. The deadline is June 15, 2022.

Get Caught Up

It’s been a busy week in tax news from state capitals to D.C. Here are some of the stories you might have missed from our Bloomberg Tax news team. Note: Your Bloomberg Tax login will be required to access Tax News.

  • The Treasury Department is considering a set of potential changes to its much-criticized new rules on foreign tax credits, addressing complaints from companies and tax advisers that some parts of the rules are too restrictive.
  • Crypto miners flocking to the US and Canada, lured by their stable business environments and low energy costs, cite a growing concern—the lack of clear tax policies governing their operations.
  • The Kansas Supreme Court grappled with how to determine the value of 11 Walmart Inc. and Sam’s Club stores for property tax purposes.
  • The OECD should do its best to get complexity under control in implementing the global tax agreement, to help companies comply and avoid disputes and waste, corporate tax executives said.

Spotlight

Our Spotlight series highlights the careers and lives of tax professionals across the globe. This week’s focus is on Kelly A. Rohrs, who has her own certified accounting firm in Rockville Centre, N.Y.

Our Wish List

What’s on our Bloomberg Tax Insights wish list right now?

For June, we’d welcome thoughtful pieces on graduates. That includes taxpayer-advice-focused articles on what tax advisors are telling their clients who are just starting out in the workplace—approaches on withholding, pre-tax savings, etc.—and tax-favored strategies related to paying for higher education. It also includes advice for new grads hitting the tax and accounting job markets—what would you tell your younger self?

We’re also looking for tax pieces focused on travel and tourism. Specifically, we’d love to see how advisers and planners suggest taxpayers maximize tax benefits for vacation and rental homes, including estate planning techniques. And as state and local governments take a second look at Airbnb and related companies, we’d appreciate updates on those tax laws as well as strategies for keeping those taxes to a minimum—the same applies to other kinds of tourism-related taxes. And finally, with remote work still being a hot topic, pieces addressing what workplaces should know about “work anywhere” policies are welcome, especially as they apply to cross-state and cross-nation borders.

Our Insights articles—about 1,000 words—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 email (TaxInsights@bloombergindustry.com).

Upcoming

This tax season has been, well, taxing. But now that it’s over, maybe you can use that extra energy for the Bloomberg Tax Insights Virtual 5k. Run, walk, or run/walk 5k (that’s 3.1 miles!) any time between June 6 and June 12 to support a great cause. For the second year in a row, we’re donating the proceeds to World Central Kitchen, which works to fight hunger around the world and is serving meals to Ukraine families in need. You can sign up here.

Career Moves

Anika Chandra has joined Osborne Clarke as an incentives partner in London, the law firm has announced.

Doug Michael has been appointed partner and US tax practice lead of Anderson Anderson & Brown, based in the London office, according to the firm.

If you are changing jobs or being promoted, let us know. You can email your submission to TaxMoves@bloombergindustry.com for consideration.

Quick Numbers Answer

By analyzing data from the national VisitScotland tourism organization and local area businesses, Campbell estimated that Nessie adds nearly $54 million USD (£41 million) to the Scottish economy every year.

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What Did You Think?

Your feedback and suggestions are important to us, so don’t hesitate to reach out on social or email me directly at kerb@bloombergindustry.com.

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