Cares Act tax breaks for wealthy retirees, Mnuchin curbing Fed lending powers and other business turkeys

In addition to that serious stuff, I also get to have some journalistic fun by writing about the business turkeys of the year. As in, “Boy, was that deal a turkey!”

I stick to business, financial and tax turkeys, because that’s the stuff I write about. I leave political turkeys, of which there’s certainly a bumper crop, to my Washington Post colleagues who write about politics.

So let me show you some of this year’s foul-ups.

Helping the non-needy. One of the more wasteful provisions of the Coronavirus Aid, Relief, and Economic Security Act, also known as the Cares Act, lets people like me who are 72 and older avoid taking required minimum distributions (RMDs) from our individual retirement accounts this year. We got this tax break — RMDs are federally taxable — because stocks were in the tank when the Cares Act was enacted in March, and Congress worried that forcing older people and people with inherited accounts to sell stock in a down market to take RMDs would sharply reduce their remaining balances. Rather than limiting the RMD exemption to $25,000, as I (and I suspect others) suggested, Congress made the exemption unlimited. As a result, many people like me, who are fortunate enough not to need RMD money to pay their bills, have taken little or nothing in the way of distributions. However, people who need the money to live on have taken distributions and therefore have gotten no benefit from this provision. Meanwhile, stock prices are at near-record levels. So it turned out that many old folk didn’t need any help.

Not helping the needy. Another turkey-esque provision of the Cares Act allows taxpayers who don’t itemize deductions to subtract $300 of charitable contributions from their 2020 adjusted gross income without having to show that any contributions were actually made. I wonder how much in extra donations this provision has produced for charities — I suspect very little. How much will this provision increase the federal budget deficit? I suspect by quite a bit.

Stomping on Ant. When Jack Ma, the Chinese zillionaire, criticized what he called the “pawnshop” mentality of Chinese banks, it set in motion a chain of events that resulted in the cancellation of a $34.5 billion initial public offering of stock in Ant Group, a fintech firm that Ma founded. Refusing to tolerate criticism is a turkey move that I suspect will hurt the Chinese government much more than it hurt Ma. How so? Because Ma still has plenty of money — but the government stomping on the Ant IPO is likely to make companies and individuals less likely to flock to China to invest their capital.

Frustrating the Fed. Treasury Secretary Steven Mnuchin’s order to the Federal Reserve to send back hundreds of billions of dollars that it has been holding for possible use in emergency lending programs to help the economy is a total economic turkey. Whether it’s a political turkey — or a politically motivated turkey — is for others to say. But one thing is clear: If you care about our country and the millions of mostly lower-income people being economically ravaged by the coronavirus and its side effects, you don’t do what Mnuchin is trying to do. Especially given that the Fed, which has no political ax to grind that I know of, is objecting publicly.

Citi’s $900 million miscue. Because of a computer hiccup, Citibank sent some Revlon creditors about $900 million rather than the $9 million or so of interest that it should have sent them. Some recipients gave the extra money back. Others are in litigation. It’s a total turkey. I hope that someday I get to gobble up 100 times what I’m owed. Not likely, however.

Wirecard’s wild bookkeeping. This is another funny story, unless you happened to work for Wirecard, a German-based online payment firm, or owned stock in it. Or were part of the Ernst & Young crew that was supposedly auditing it. Wirecard, once a hot stock, now a disaster, engaged in financial fantasy for years but was finally forced to admit that about $2 billion of the cash that it carried on its books didn’t exist.

There are numerous turkeys I haven’t gone into, such as Vanguard sending wrong information to clients about money market fund yields.

But I’ll end here by wishing you and yours a happy and healthy holiday regardless the size of your Thanksgiving gathering. Or whether we agree about anything in this column or in my other Post columns. Take care, be well, stay safe.

CORRECTION: An earlier version of this story said the Cares Act charitable tax deduction for joint filers was $600. It is $300 maximum for single and joint filers.