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Tax Reform News

 

Overview of Changes

 

Current Law

New Law 

Personal rates

Seven brackets: 10%, 15%, 25%, 28%, 33%, 35%, 39.6%

Seven brackets: 10%, 12%, 22%, 24%, 32%, 35%, 37%

Personal long-term capital gains and qualified dividend rates

Up to 23.8%

Unchanged; rates tied to existing taxable income thresholds

Maximum pass-through tax rate

39.6%

Ordinary rates with deduction of 20% of qualifying domestic income; limited deduction for income from lower-income service businesses, excluding engineers and architects

Maximum corporate tax rate

35%

21%

Personal standard deduction

Married filing jointly: $12,700
Head of household: $9,350
Single: $6,350

Married filing jointly: $24,000
Head of household: $18,000
Single: $12,000

Child tax credit

$1,000 per child

$2,000 per child (refundable to $1,400 per child)
$500 for non-child dependents

Personal exemption

$4,050

Repealed

Personal state income, sales tax and property tax

Allowable as itemized deduction

Deduction for property tax and either income or sales tax limited to $10,000

Mortgage interest

Deductible on up to $1.1 million of debt; interest on second home deductible

Deductible on up to $750,000 of debt, including second home; no home equity interest deduction

Individual Alternative Minimum Tax (AMT)

Imposed when minimum tax exceeds regular income tax

Increases AMT exemption amounts and phase-out

Medical expenses

Deductible to the extent they exceed 10% of adjusted gross income (AGI)

Deductible to the extent they exceed 10% of AGI (7.5% of AGI for 2017 and 2018)

Alimony

Deductible to payor, taxable to recipient

Not deductible to payor, not taxable to recipient for decrees executed or modified after 2018

Individual health insurance mandate

Individuals penalized for failure to carry minimum essential health insurance coverage

Repealed

Depreciation

Fixed assets generally capitalized and depreciated; in some cases, Section 179 immediate expensing of up to $500,000 is available

Immediate expensing of most new and used property (excluding structures) through 2022; Section 179 limit increased to $1 million

Net operating losses (NOL)

Generally carried back two years and forward 20 years

Carryback repealed except for farms, which are left at two years; indefinite carryover deduction limited to 80% of pre-NOL income for losses generated after 2017

Excess business loss

No provision

Net business losses in excess of $500,000 ($250,000 single) not deductible and become an NOL carried over to the next year

Business interest

Generally deductible

Generally limited to the extent that interest exceeds 30% of income, unlimited carryover of excess. Determined at entity level, but spillover effects to owner. Limitations not applicable if average annual gross receipts do not exceed $25 million

Cash method of accounting

Generally limited to businesses with less than $1 million, $5 million or $10 million in receipts, depending on facts

Expanded to include businesses with less than $25 million in receipts with special rules for tracking inventory costs

Domestic production activities deduction

Domestic producers eligible for deduction equal to 9% of qualifying income

Repealed after 2017

Corporate AMT

20%

Repealed after 2017; AMT credits refundable from 2018-2021

Gift and estate tax

Tax of up to 40% imposed on gifts and estates, subject to $5.49 million lifetime exemption per spouse

Lifetime exemption doubled, estate tax remains in effect, step-up in basis retained

Tax Reform Events

A New Look at S Corporations

This program will address the critical issues and special opportunities facing S corporations, with a focus on the new Section 199A qualified business income deduction and the aftermath of the 2017 tax reform on flow-through entities. Practical solutions and strategies of choosing an S corporation

New Travel & Entertainment Expense Reporting Rules

This program reviews the statutory and regulatory guidance as they related to travel, entertainment and business transportation expenses, with a focus on planning opportunities. Recent federal tax legislation repealing the deduction for entertainment will be addresses, as well as relevant cases and

Health Care Reform Act: Critical Tax and Insurance Ramifications

The Health Care Reform Act continues to phase in this year and will continue in the years to come. Join this webcast to better understand the impact of the Act. With our detailed examples, you will be able to better meet your clients' needs and discuss how health care and coverage costs will change

2018 Federal Income Tax Update - Part 2

This course is essential for the tax practitioner who wants to update their knowledge of individual income taxation. This course will provide a comprehensive review of Form 1040 complexities. Updates for tax legislation passed in late 2017 (The Tax Cuts and Jobs Act) along with many important topics

Planning to Defeat the 3.8 Percent Net Investment Income (Medicare) Tax

Do you desire to avoid being tripped up and held back by paying the 3.8% Net Investment Income (NII) tax? This relatively new tax is a continuing source of irritation for high income clients. Interestingly, the NII tax can often be avoided by proper structuring. An intimate knowledge of the rules

Disregarded Entities?: Now You Don't See Them, Now You Do

What is a disregarded entity (DE)? It is a business entity that is generally disregarded from its owner for federal income tax purposes, but not disregarded for (some or all) other purposes. If an entity is "disregarded" for federal income tax purposes, it may be "regarded" for other federal tax and

2018 Federal Income Tax Update - Part 1

This course is essential for the tax practitioner who wants to update their knowledge of individual income taxation. This course will provide a comprehensive review of Form 1040 complexities. Updates for tax legislation passed in late 2017 (The Tax Cuts and Jobs Act) along with many important topics

Estate Administration Process - The Tax Practitioners Guide

Estate and trust administration is a growing part of a CPA’s practice. The CPA should understand the process and implications of estate and trust administration. This course focuses on the CPA’s role as a key member of the administration team. Delivery Method: Individual webcast CPE Credit: Taxes

Tax Reform News & Resources

Treasury Repeals Hundreds of Outdated Tax Rules

The U.S. Treasury Department finalized the repeal of 296 obsolete or duplicative tax regulations in response to President Donald Trump’s executive orders early in his administration calling on the Treasury and other departments to get rid of unnecessary regulations. The proposed list last year

Is Tax Reform Spurring Companies to Use Robots?

More companies are finding more uses for robots, a broad trend that certainly will further expand. Many factors explain it — including a perhaps surprising one: the Tax Cuts and Jobs Act. A key provision of the tax reform law allows companies to deduct 100 percent of the cost of equipment in the

IRS Proposes Guidance on FDII, GILTI deductions

The U.S. Internal Revenue Service (IRS) issued guidance on determining the amount of the deduction for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI) under Sec. 250. The’s proposed regulations also detail how taxpayers coordinate the FDII and GILTI provisions

Treasury Noncommital on Waiving Under-Withholding Penalties Further

The Treasury Department so far isn’t agreeing with requests from congressional Democrats and the American Institute of CPAs (AICPA) to go further in eliminating tax penalties for taxpayers who didn’t withhold enough taxes last year after passage of the Tax Cuts and Jobs Act (TCJA). Last month, the U

Do Tax Law Changes Affect IRA Deductibility?

Workers have until the last day of the tax-filing season to make 2018 contributions to their traditional IRAs. Although more taxpayers are expected to opt for the standard deduction, which increased under the new law, they can still claim the tax deduction for IRA contributions. That’s because the

IRS Issues Bonus Depreciation Safe-Harbor Rules for Vehicles

The U.S. Internal Revenue Service (IRS) provided a safe-harbor method to determine depreciation deductions for passenger automobiles that qualify for the 100 percent additional first-year depreciation deduction and that are subject to the depreciation limitations for passenger automobiles under Sec.

Current Developments in Partners and Partnerships

T his article reviews and analyzes recent law changes as well as rulings and decisions involving partnerships. The discussion covers developments in the determination of partners and partnerships, gain on disposal of partnership interests, partnership audits, and basis adjustments. During the period

IRS Finalizes Sec. 695 Transition Tax

The U.S. Internal Revenue Service (IRS) issued final regulations on the Sec. 965 transition tax, which was added to the Code by the law known as the Tax Cuts and Jobs Act, P.L. 115-97. Sec. 965 applies to the last tax year of a deferred foreign income corporation (DFIC) that begins before Jan. 1,

IRS Waives Penalties for Underwithholding, Underpayment

The U.S. Internal Revenue Service (IRS) announced that it is waiving the estimated tax penalty for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year. The IRS is generally waiving the penalty for any taxpayer who

TAX: No Decision on Opening Date for Tax Season

The Virginia Department of Taxation (TAX) said Wednesday that it will not be participating in the U.S. Internal Revenue Service’s (IRS) soft launch and an opening date for individual tax return and business tax return filing (corporate, pass-through entity and fiduciary) has not been decided. The