Week in Insights: We Don’t Talk About Bruno – Bloomberg Tax

Admit it: You’ve caught yourself humming the refrain from “We Don’t Talk About Bruno,” the catchy—but somewhat dark—hit from Disney’s animated film “Encanto.” And who can blame you? The song has been everywhere for months.

The breakout hit was written by Lin-Manuel Miranda—you might remember him from a little show called “Hamilton” and the Disney film “Moana.”

The “Encanto” soundtrack became a surprise hit in early 2022, leapfrogging to the top of the Billboard 200. That’s not very common—it’s just the sixth animated film soundtrack to hit No. 1 since 1956, when the Billboard 200 began publishing every week.

The catchy tune might have catapulted the song to the top, but the lyrics have continued to hold the audience’s interest.

So let’s talk about Bruno.

The star of “Encanto” is a little girl named Mirabel. Mirabel doesn’t know much about her uncle, Bruno, who disappeared from the family years ago. She only knows that the family doesn’t talk about him.

It turns out that Bruno, voiced by John Leguizamo, is a little different from the rest of the family, and they don’t know what to do with him. And that was enough to keep him a secret—not only literally hidden away but not to be discussed, especially in front of Abuela.

The family is so concerned about not upsetting their matriarch or causing upheaval that they simply don’t talk about Bruno. Or their feelings. Or what’s happening to make them uncomfortable. Instead, they keep those things quiet, smile, and pretend that everything is okay.

I’ve been thinking about this a lot lately. It’s been hard to watch the news unfold—the shootings in Buffalo, Dallas, Laguna Woods, and, this week, Uvalde. And we’re having to unpack this in the shadow of war and economic uncertainty.

As a parent, it’s been challenging to keep up appearances. And as a professional, even as I watch some of my colleagues struggle—including my friend whose child attends school in a district that faced a lockdown on Thursday and another who was advised when she showed up to work this week that she was no longer needed—I know that some would just as soon pretend that this is all OK. Only it isn’t.

May is National Mental Health Awareness Month. You might have seen some awareness campaigns at your workplace—I know we did at Bloomberg Tax.

Corporate culture has long dictated that we don’t talk about mental health very much in the workplace; I suspect I’ll even get emails from those of you who would rather I didn’t talk about it here. I’ve thought about that quite a bit.

But stress is inherent in the tax, legal, and accounting professions—we are often tasked with putting together huge deals, working long hours, and meeting strict deadlines. We often feel responsible for the well-being of our clients—and that’s on top of the obligations we feel towards our families. Sometimes, the very last person we look out for is ourselves. But we should. And that’s why I’m choosing to talk about it now.

Hopefully, you have some time off this weekend to recharge. Maybe that means taking in a ballgame with friends, grabbing a drink with a colleague, curling up on the sofa with a good book, or simply watching a movie like “Encanto” with your family. And if you need to talk with someone about feeling sad or overwhelmed, resources are available. It’s OK not to be OK.

The Exchange… It’s where great ideas intersect.

—Kelly Phillips Erb

Quick Numbers Trivia

I noted that Encanto was only the animated film soundtrack to hit No. 1 on the Billboard 200 since 1956. Can you name the other five—and how many of the six are Disney films?

Answer at the bottom.

Our Roundup

Our experts touched on a wide range of topics, from virtual rents to charitable giving. For a look at what’s making news, here’s our roundup.

Nonprofits & Charitable Giving

Tax-exempt organizations will need to consider logistics, gift acceptance policies, and general best practices if they are interested in accepting cryptocurrency donations, say Crowell & Moring’s Eleanor Moran McWaters and Charles C. Hwang.

As shareholder wealth increases, so too does their share of non-withheld income, leading to higher taxes. Charitable giving can help shareholders reduce taxes and feel good about doing it, says Envestnet | PMC’s Erik Preus.

We are seeing individuals, corporations, and foundations increasingly take a more strategic approach to philanthropy. Ultimately, donors and investors will decide what is important and meaningful to them and what will lead them to invest in an enterprise, say Deloitte Tax LLP’s Jane M. Searing and Mike Schlect.

Global Economies

Abdulrahman A. Al-Hamidy of the Arab Monetary Fund and Daniel A. Witt of the International Tax and Investment Center discuss how governments in Arab countries can address the fiscal challenges they face post-Covid-19 and restart vitally needed economic growth.

Amid calls for a windfall tax on energy companies in the UK, Laurence Field of Crowe discusses the history and context of these taxes, considers what makes taxes politically acceptable, and looks at their potential short-term benefits and longer-term consequences.

Editor’s Note: After publication, the UK announced the imposition of just such a tax. Your Bloomberg Tax login will be required to access Bloomberg Tax news.

The UK tax authority is scrutinizing investors holding cryptocurrency assets. William Je of Himalaya Exchange explains the tax implications and what investors can do to ensure compliance and avoid penalties.

Federal Issues

The IRS whistleblower program’s success in detecting and deterring tax crimes has been undermined by a recent US Tax Court decision concerning the appropriate standard of review for analyzing decisions made by the IRS Whistleblower Office, say the National Whistleblower Center’s Siri Nelson and Ben Falstein.

Savvy investors and waning optimism that Congress and the Biden administration will be able to legalize cannabis and de-schedule Section 280E have contributed to a slowdown in M&A activity. UHY LLP’s Todd Tigges shares some accounting considerations for cannabis companies in the US currently looking to raise capital through a merger, acquisition, or standalone effort.

Virtually all industries that rely on manual labor have experienced significant labor shortage issues. Brent Johnson of Clarus Solutions discusses how business owners can use the Work Opportunity Tax Credit when hiring new employees.

US citizens holding dual foreign nationality and living abroad may have individually owned assets that could be subject to foreign government expropriation, says Gunster, Yoakley & Stewart, P.A.’s Alan S. Lederman. Their recourse to US free trade agreement investor protections against such expropriation may or may not be limited by “denial of benefits” clauses in those agreements.

State and Local Tax

The pandemic-induced recession and associated revenue losses were short-lived despite being steep. Still, a new set of worrying fiscal trends is starting to emerge, says Lucy Dadayan of the Urban-Brookings Tax Policy Center at the Urban Institute.

Tech

If all goes according to the original plan, Elon Musk will close a deal to buy Twitter for $44 billion, a figure that is highly attributable to data Twitter has aggregated. A tax on the revenue generated by that data would help equalize what is otherwise unreachable largess, says Bloomberg Tax columnist Andrew Leahey.

Aleksandra Bal of Stripe discusses a recent German case that considered whether renting out land in a virtual space to users’ avatars constituted a taxable digital service and was therefore subject to VAT.

A Closer Look

While the breadth and depth of how and if companies embrace ESG varies significantly by industry and company, many companies are moving toward more sustainable business practices. Given this change, companies need to reevaluate the value drivers of their business to determine if they need to modify their transfer pricing policies, say KPMG’s Jessie Coleman and Jack O’Meara in this edition of “A Closer Look.”

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.

Columnists

“Celebrities face the same justice that everyone does,” claimed US Attorney Byung J. “BJay” Pak after the indictment of reality television stars Todd and Julie Chrisley. While ordinary taxpayers may not have as many zeroes to manage in our bank accounts as celebrities, we have the same basic reporting and filing obligations. Here’s what you can learn from reality TV stars’ tax miscues.

Listen In

Cash cushions plump with federal pandemic relief dollars and a surge in tax revenues, state legislatures across the country have cut taxes aggressively this year. But several states went further, converting their tiered income tax structures to flat-rate systems. Arizona, Georgia, Iowa, and Mississippi have committed to the flat tax recently, and Oklahoma is likely to join the group soon.

In this episode of Talking Tax, Bloomberg Tax Staff Correspondent Michael J. Bologna talks with Katherine Loughead, a senior policy analyst with the Tax Foundation, and Kamolika Das, a state tax policy analyst with the Institute on Taxation and Economic Policy, about the consequences of a departure from decades of state tax policy.

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. Our deadline is June 15, 2022.

Get Caught Up

It’s been a busy week in tax news from state capitals to DC. 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 Bloomberg Tax news.

• Former President Donald Trump and two of his adult children must testify under oath as part of New York’s civil probe into the family real estate business, a state appeals court ruled.
• BP Plc said it will look again at its plans in the UK, raising questions about whether a £5 billion windfall tax on oil and gas profits announced by the government included enough incentives to preserve investment.
• It’s “very likely” that Ireland will introduce a domestic minimum tax as part of implementing the 2021 global tax deal’s 15% minimum tax rules, the government said.
• In the next priority guidance plan, the IRS and Treasury Department need to simplify tax processes, the American Institute of CPAs said in a May 24 letter.
• Georgia’s motor fuel excise tax freeze will be extended through July 14 after Gov. Brian Kemp signed an executive order.

Spotlight

Our Spotlight series highlights the careers and lives of tax professionals across the globe. This week’s Spotlight is on Arianna Carrington-Hooker, an enrolled agent and president of Innovative Tax Solutions of Central Florida in Ocoee, Fla.

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 worldwide and is serving meals to Ukrainian families in need. You can sign up here.

Career Moves

Specialist tax and incentives lawyers Claire Matthews and James Ross have joined Taylor Wessing’s London office as partners, the law firm said.

Katten Muchin Rosenman UK LLP has added partner Oliver Williams to its corporate practice in London, the firm said.

Daphne Goldman has joined the estates and trusts group at Archer as of counsel in the Voorhees, NJ office, the law firm announced.

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

The other animated film soundtracks to hit No. 1 on the Billboard 200 since 1956 are:

1. “Frozen II” (2019)
2. “Frozen” (2014)
3. “Curious George” (2006)
4. “Pocahontas” (1995)
5. “The Lion King” (1994-95)

Five of the six films are Disney films. “Curious George” is the exception.

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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.