🧾 The Tax Man Cometh For...?

Good morning. US stock futures were mixed in Tuesday morning trading as investors gear up for May retail sales data.

🧾 IRS seeks to close tax loophole, collect billions in outstanding taxes from wealthy

📝 Our report: The IRS is set to close a major tax loophole for the wealthy, potentially raking in over $50 billion in the next decade, according to the U.S. Treasury Department. The proposed rule and guidance includes plans to essentially stop “partnership basis shifting" — a process by which a business or person can move assets among a series of related parties to avoid paying taxes.

 🔑 Key points:

• Biden administration officials said after evaluating the practice that there are no economic grounds for these transactions, with Deputy Treasury Secretary Wally Adeyemo calling it “really just a shell game.”

• Due to previous years of underfunding, the IRS had cut back on the auditing of wealthy individuals and the shifting of assets among partnerships and companies became common.

• Treasury said in a statement announcing the new guidance that there is an estimated $160 billion gap between what the top 1% of earners likely owe in taxes and what they pay.

💡 So what: The IRS's move to close the "partnership basis shifting" tax loophole will have significant implications for various stakeholders. Wealthy taxpayers and businesses who have benefited from this loophole will face higher tax liabilities, as their ability to reduce taxable income through complex partnership structures will be curtailed. While it could level the playing field by ensuring that all taxpayers pay their fair share, it may also lead to increased scrutiny and audits of partnership arrangements, affecting compliance costs and administrative burdens for businesses.

Tuesday - U.S. Retail Sales, Chicago Fed President Austan Goolsbee Speech

Wednesday - No Major Economic News

Thursday - Philadelphia Fed Manufacturing Survey

Friday - U.S. Leading Economic Indicators

📈 Investing legend Ray Dalio shares these 5 tips for success!

💰 25 passive income ideas worth exploring!

👨🏾‍💼 Don’t be afraid of career rejection. It can lead you to success!

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💳 Apple kills buy-now, pay-later in the US

WHAT: Apple announced it has hit the pause button on its Apple Pay Later loans, which launched last year under its buy-now-pay-later program. The move comes after Apple said it would start allowing installment loans later this year in its Apple Pay checkout process through third-party companies, such as Affirm, and credit and debit cards from issuers, such as Citigroup.

WHY: Apple said users who wanted installment plans at checkout would gain access to them through other financial intermediaries in more countries around the world than they would with Apple Pay Later, which was only available in the U.S.

💵 Failed crypto company agrees to settle with SEC

WHAT: Another big name in crypto is being forced to pay real dollars for his digital misdeeds. A judge just greenlit a $4.5 billion settlement between Do Kwon, his bankrupt crypto firm Terraform Labs, and the SEC. In April, a jury unanimously found Kwon and TerraLabs guilty of securities fraud.

WHY: Kwon has been hiding for years after the implosion of his two digital stablecoins, Luna and Terra. While stablecoins are backed by actual hard assets, Kwon’s coins turned out to be backed by a web of complex codes. When an algorithm failed in 2022, $40 billion in market value went poof; hedge funds collapsed, and investors ran for the exit.

🍔 McDonald’s scuttles AI drive-thru experiment

WHAT: McDonald’s is flipping the script on its AI plans, ending its test run of AI drive-through tech with IBM in over 100 restaurants. The so-called Automated Order Taker will be shut off no later than the end of July according to a memo sent to franchisees in recent weeks.

WHY: The decision comes as restaurants from Del Taco to Wingstop to Panera and more have been testing out various ways to use AI, from front to back of house as a way to streamline operations. Chipotle and Yum Brands have also been leaders in both robotics and AI investments in recent years.

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