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Repealed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Repealed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Carryback repealed except for farms, which are left at two years; indefinite carryover deduction limited to 80% of pre-NOL income for losses generated after 2017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

Surgent's Section 163(j): Business Interest Limitation After TCJA (S163)

The Tax Cuts and Jobs Act added Section 163(j), limiting the deduction of business interest for certain taxpayers. Section 163(j) is accompanied by hundreds of pages of IRS regulations addressing important elements of this statute which we have incorporated into digestible parts of this program.

Revising Your Estate Plan due to Tax Reform

The Tax Cuts and Jobs Act of 2017 has made significant changes to the Internal Revenue Code. Estate planning has been significantly affected by this Act. This course is designed to provide the practitioner with practical solutions to adjusting a client’s estate plan in these changing times. Delivery

Understanding Business Valuations

Valuing your business accurately is essential if you don’t want to risk leaving money on the table or scaring away potential buyers. Before undertaking the appraisal, put time into sprucing up your business and its financials. Effort spent on the outside will pay dividends down the road. **Please

Revising and Expanding Charitable Planning Techniques

Charitable giving in financial and estate planning can be complex in nature. This course provides participants with an understanding of, and familiarity with, charitable giving concepts. In addition, the course looks at a number of advanced planning strategies in the area of charitable planning. *

Tax Reform: A Practical Review of All Planning Issues

The legislation has passed; Congress has drastically changed the Internal Revenue Code by enacting the Tax Cuts and Jobs Act of 2017. Due to the Act, tax planning, financial planning, and estate planning techniques and strategies will need to be changed. In this course, the participant will learn

IRAs and Roth IRAs - Pots of Gold at the End of the Rainbow

Systematic saving and intelligent use of tax breaks is critical to being able to retire at all and retire well. This course locks down on building a future to count on. Updated in July 2018, the course takes a fresh look at the tax and asset protection aspects of individual retirement accounts under

Surgent's Tax Advantages of Investing in Opportunity Zones (OZTA)

The IRS recently issued proposed guidelines giving investors sufficient certainty to consider investing in Opportunity Zones. Opportunity Zones were added to the tax code by the Tax Cuts and Jobs Act. Anyone who makes a qualified investment in an Opportunity Zone can defer capital gains from an

Tax Cuts & Jobs Act - QBI Deduction & TCJA Update

The Tax Cuts and Jobs Act (TCJA) was a major overhaul of our tax system that has lowered the income tax rates for individual and corporate taxpayers and introduce a new 20% deduction for qualified business income (QBI) for sole proprietors and pass-through entities (starting in 2018). The

Tax Reform News & Resources

Senate Finance Task Forces Issue Reports on Future of Tax Extenders

The leaders of the Senate Finance Committee issued three summary reports from their internal task forces examining what to do about the perennial problem of temporary tax breaks that need to be extended every few years. Even though the PATH Act of 2015 and the Tax Cuts and Jobs Act of 2017 were

IRS Cancels Postcard-Sized Income Tax Return

Proponents of tax simplification have bandied about the idea for a postcard-type Form 1040 for years. It came closer to fruition when the massive Tax Cuts and Jobs Act (TCJA) was enacted at the end of 2017. Despite the TCJA changes, however, the U.S. Internal Revenue Service (IRS) still requires

TCJA Spurs Capital Investment, but More Abroad Than at Home

The Tax Cuts and Jobs Act (TCJA) sharply reduced the U.S. corporate tax rate, sped depreciation deductions, and greatly lowered the cost of repatriating vast undistributed earnings of foreign subsidiaries. President Donald Trump, envisioning increased capital investment and a resultant boosts in

SEC Issues Guidance on Opportunity Zone Investments

The U.S. Securities and Exchange Commission (SEC) teamed up with the North American Securities Administrators Association (NASAA) to explain the application of federal and state securities laws to opportunity zone investments. The Tax Cuts and Jobs Act (TCJA) set up the opportunity zone program as a

Why the TCJA Packs Even More Depreciation Punch

The Tax Cuts and Jobs Act (TCJA) combines powerful enhancements for the Section 179 “expensing” and “bonus” depreciation deductions. That’s an effective 1-2 punch that’s hard to beat. Given the TCJA's impact on deductions, there’s a good chance that your small business clients can immediately deduct

Virginia Taxpayers Must File By July 1 to Qualify for Relief Refund

Virginia taxpayers must file by midnight on Monday, July 1 to qualify for the Tax Relief Refund, the result of state legislation passed by the 2019 Virginia General Assembly in response to the federal Tax Cuts and Jobs Act (TCJA). An individual filer could receive up to $110 and a married couple

The Shifting Deduction Landscape Under the TCJA

Before the Tax Cuts and Jobs Act (TCJA), most moderate-to-high-income taxpayers itemized deductions on Schedule A, rather than claiming the standard deduction on their personal returns. Due to a few sizeable deductions, the amount often exceeded the standard deduction — sometimes by a lot. Since it

Tax on Nonprofits Could Also Snare Companies

Companies with affiliated tax-exempt entities could find themselves surprised to be on the hook for a new tax, in light of interim guidance recently released by the U.S. Internal Revenue Service (IRS). A controversial provision of the Tax Cuts and Jobs Act imposes a 21 percent excise tax on

Attempt to Ban SALT Weakened by Strong Data

It was always a long shot, but a quixotic lawsuit by four northeastern states to squelch the Trump tax law's cap on state and local tax deductions is being undermined by a repetitive drip of strong economic data. New York, Connecticut, Maryland and New Jersey will get their first hearing in June on

The Marriage Tax Penalty Post-TCJA

The U.S. federal tax system has featured some form of higher income taxes for dual-earner married couples than for two unmarried persons since 1913; this is commonly referred to as the marriage tax penalty. Similar to prior tax reforms, the law known as the Tax Cuts and Jobs Act (TCJA) preserved the