Colleges Get Tax Reprieve in Push to Value Endowment Assets

Bloomberg reports:

Colleges facing the new endowment tax are getting some relief: they won’t be taxed on unrealized income from their billions of dollars in assets before the levy was approved.

Schools had been looking for help on this issue, and they got it in the form of Internal Revenue Service guidance issued Friday. A college trade group had asked Treasury Department officials last month to use a “stepped-up” basis for calculating the tax. Using appreciated prices means the tax will only apply to income earned since the end of 2017, which in turn would mean a lower bill than using the original cost basis.

The 1.4 percent tax on net investment earnings is set to hit about 30 private colleges in the fiscal year that begins July 1 for most schools. The tax affects schools with more than 500 tuition-paying students and net assets of at least $500,000 per student.

The struggles of the socialists!