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Archive for Tax Cuts and Jobs Act

New Deduction For Pass-Through Entities

Haik Chilingaryan- Tax Deductions For Passthroughs

Under the new tax laws (“TCJA”), there is a new deduction available to owners of pass-through entities. Section 199A of the Internal Revenue Code allows owners of pass-through entities to deduct up to 20% of their business income from their income taxes. The first portion of this article provides an overview on the various types of pass-through entities that are included under Section 199A. The second portion of the article provides an analysis on the conditions that the owners of pass-through entities must satisfy in order to qualify for the 199A deduction.

PASS-THROUGH ENTITIES

For purposes of Section 199A, the following entities are entitled to the deduction: sole proprietorships, partnerships, limited liability companies, S corporations, trusts, and estates. The most distinguishing characteristic of pass-through entities is that the entities themselves generally do not pay tax. Instead, all of the earnings and expenses are passed through to the owners who pay the taxes on their individual tax returns. The sections below provide an overview on the general characteristics of each type of pass-through entity.

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Congressional Record – Tax Cuts And Jobs Act 501 (c)(3) Organizations (Part 13)

Congressional Record - Tax Cuts And Jo

Baptist Joint Committee for Religious Liberty,

Washington, DC, November 6, 2017.

Hon. Kevin Brady, Chairman, House Ways and Means Committee, Washington, DC.

Hon. Richard Neal, Ranking Member, House Ways and Means Committee, Washington, DC.

Dear Chairman Brady and Ranking Member Neal:

On behalf of the Baptist Joint Committee for Religious Liberty (BJC), an 81-year-old agency serving 15 Baptist bodies on legal and policy matters relating to religious liberty and the separation of church and state, I write to express strong opposition to Section 5201 of the Tax Cuts and Jobs Act. This provision seriously undermines the independence and integrity of our houses of worship and denominations by creating an exemption to the partisan campaign prohibition that applies equally to all 501(c)(3) organizations. This attempt to encourage certain religious organizations to engage in partisan campaigning is constitutionally problematic following the Supreme Court’s application of the Establishment Clause in Texas Monthly v. Bullock.

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Complimentary Courses For Corporate Tax Professionals: ASC 740 Tax Provision And Tax Cuts And Jobs Act

Nick Frank- ASC 740 Tax Courses

Corporate tax professionals are invited to attend the four scheduled complimentary training classes on ASC 740. These include: ASC 740 – Intersection Series; ASC 740 The Basics; ASC 740 Stock Compensation And Sec 162m; and ASC 740 International Under The Tax Cuts And Jobs Act.

These courses are part of a series brought to you by Tax Prodigy/TaxConnections and are with our compliments. Nick Frank is a national leading instructor on the tax provision and makes simplifies the entire process for anyone responsible for the corporate tax provision. He is also CEO of Tax Prodigy and a Professor at the University of Minnesota, Minneapolis, Minnesota on the tax provision.

You can easily register by going to TaxConnections newly updated Tax Events Calendar.

 

 

Congressional Record – Tax Cuts And Jobs Act (Part 12)

Congressional Record - Tax Cuts And Jobs Act Part 12

Impact Of GOP Tax Plan On Students (By Jenny C. Bledsoe)

The House GOP tax bill makes graduate school inaccessible for anyone who is not independently wealthy, and it will likely cause current graduate students to drop out of doctoral programs and/or declare bankruptcy.

A single line in the 429-page bill effects this change: 26 U.S. tax code Sec. 117(d) allows students conducting research or teaching for a university (usually Ph.D. students on fellowship) to receive tuition waivers tax free. Any stipends are taxed.

The House “Tax Cuts and Jobs Act,” however, will repeal this provision, meaning that a Ph.D. student making a stipend of $24,000 will be taxed as if they are making $85,200. This would have been my situation two years ago. During the first three years of Emory’s Ph.D. program, a student currently receives a tuition waiver amounting to $61,200. Once you reach “tuition-paid” status after your third year, the annual tuition is $30,600.

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Congressional Record – Tax Cuts And Jobs Act (Part 11)

Congressional Record - Tax Cuts And Jobs Act Part 11

Mr. BRADY of Texas. Mr. Speaker, I yield 3 minutes to the gentleman from Ohio (Mr. Renacci), one of our key members of the Ways and Means Committee.

Mr. RENACCI. Mr. Speaker, I rise today in support of H.R. 1, the Tax Cuts and Jobs Act. First of all, I want to thank President Trump for making this a priority, but I especially want to thank Chairman Brady for his tireless efforts and leadership in bringing this legislation to the floor today.

Three decades ago, there was a 24-year-old starting a business in Ohio. He borrowed money and started hiring people. As he grew his business, he didn’t take a paycheck and kept hiring hardworking middle class Americans. But then, as he started looking over things, he couldn’t hire anymore, because of the tremendous tax bill owed to the Federal Government.

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Congressional Record – Tax Cuts And Jobs Act (Part 10)

Congressional Record - Tax Cuts And Jobs Act Part 10

Mr. BRADY of Texas. Mr. Speaker, I yield 1 minute to the gentleman from North Dakota (Mr. Cramer).

Mr. CRAMER. Mr. Speaker, we know that the economic and job creation benefits are key components of the Tax Cuts and Jobs Act, making the U.S. globally competitive again, giving much-needed tax cuts to American business, and much-needed wage increases to American workers.

But, Mr. Speaker, it is really the long overdue direct tax benefits to the vast middle class, who don’t have a lobbyist living in the rich suburbs of Washington, D.C., that take center stage for me and my fellow North Dakotans.

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Congressional Record – Tax Cuts And Jobs Act (Part 9)

Congressional Record - Tax Cuts And Jobs Act Part 9

Eliminating SALT Deduction Is A Tax Increase And Will Devastate Education Funding

H.R. 1 would eliminate most of the state and local tax deduction (SALT)–taking money out of the pockets of as many 44 million middle-class families across the nation. While the bill hammers middle-class families on this, it oddly preserves the ability of businesses to deduct state and local taxes–yet another example of how the bill takes from working families to provide tax giveaways to those who are wealthier.

Eliminating any part of the state and local tax deduction could lead to a tax increase on middle class families and have a negative, ripple effect on the ability of states and local communities to fund public services, like education. That could translate into cuts to public schools, lost jobs to educators, and overcrowded classrooms that deprive students of one-on-one attention.

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Congressional Record – Tax Cuts And Jobs Act (Part 7)

Congressional Record - Tax Cuts And Jobs Act Part 7

Signers of the Community Letter

The Community Letter in Support of Nonpartisanship, signed by more than 5,500 organizations from every state and every segment of the charitable and foundation communities, makes a strong statement in support of nonpartisanship and urges those who have vowed to repeal or weaken this vital protection to leave existing law in place for nonprofit organizations and the people they serve.
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Congressional Record – Tax Cuts And Jobs Act (Part 6)

Congressional Record - Tax Cuts And Jobs Act Part 6

Mr. HENSARLING. Mr. Speaker, for almost a decade, Americans suffered under  Obamanomics. Their savings remain decimated, their paychecks were stagnant, and their American dreams were diminished. But, Mr. Speaker, a new day has dawned. Under the leadership of President Trump, Speaker Ryan, and Chairman Brady, we are on the precipice of passing a fairer, flatter, simpler, and more competitive Tax Code, one built for 3-plus percent economic growth. The American people can now imagine a Tax Code that brings jobs and capital back to America. They can imagine a Tax Code that is simplified from 70,000 pages to 500, where 90 percent of Americans can fill out their return on a postcard. They can imagine a Tax Code swept of all the special interest loopholes. They can imagine a Tax Code creating lower rates for working Americans and small businesses, and they can now imagine a Tax Code that is all about economic growth. All my friends on the other side of the aisle can offer is the politics of division, envy, and class warfare.I am proud to support the Tax Cuts and Jobs Act because it is all about better jobs, fair taxes, and bigger paychecks.

Mr. NEAL. Mr. Speaker, 17,000 people in Mr. Hensarling’s district will now pay higher interest on their student loan deductions.Mr. Speaker, I yield 2 minutes to the gentleman from Wisconsin (Mr. Kind), who is a great advocate for the heartland of America.

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Congressional Record – Tax Cuts And Jobs Act (Part 5)

Congressional Record - Tax Cuts And Jobs Act Part 5

Mr. LARSON of Connecticut. Lastly, Mr. Speaker, I include in the Record a letter from the Congressional Budget Office, which details out the other shoe to fall in this legislation.

Congressional Budget Office, U.S. Congress,

Washington, DC, November 13, 2017

Hon. Steny H. Hoyer,Democratic Whip, House of Representatives,

Washington, D.C.

Dear Congressman:

This letter responds to your request for information about the effects of legislation that would raise deficits by an estimated $1.5 trillion over the 2018-2027 period, specifically with respect to a sequestration–or cancellation of budgetary resources–in accordance with the Statutory Pay-As-You-Go Act of 2010 (PAYGO; Public Law 111-139).The PAYGO law requires that new legislation enacted during a term of Congress does not collectively increase estimated deficits.

The Office of Management and Budget (OMB) is required to maintain two so-called PAYGO scorecards to report the cumulative changes generated by new legislation in estimated revenues and outlays over the next five years and ten years. If either scorecard indicates a net increase in the deficit, OMB is required to order a sequestration to eliminate the overage. The authority to determine whether a sequestration is required (and if so, exactly how to make the necessary cuts in budget authority) rests solely with OMB.

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Congressional Record – Tax Cuts And Jobs Act (Part 3)

Congressional Record - Tax Cuts And Jobs Act Part 3

At the time, I was the Senate majority leader in Michigan under the last administration, overseeing the only Republican branch of government. I saw firsthand how the administration pursued targeted tax credits, one after the other, that favored one industry over the other.

It was a classic example of government picking winners over losers, and as expected, it failed miserably.

As we see at the Federal level today, in Michigan, these targeted tax benefits were paid for by everyone else in the form of tax increases, and not only did it fail to attract growth in emerging sectors as they had hoped, but it caused our economy to go into a tailspin, a very serious tailspin.
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Tax Planning Under The Tax Cuts And Jobs Act For Pass-Through Entities

John Dundon, Pass-Throughs And Tax Cuts And Jobs Act

Now that the Tax Cuts and Jobs Act (TCJA) is in full swing, many of you have been clamoring for tax planning strategies. This post addresses some essential aspects of the TCJA and suggests some strategic implications to be used for planning purposes.

One of the most significant changes coming out of the TCJA are the new tax rates:

  • The individual tax rate is reduced to a maximum 37%.
  • Tax rate for a pass-through entities can be reduced by 20%.
  • The corporate tax rate is reduced from 35% to as low as 21%.

As a result of these new tax rates there is a growing debate over whether a business should be organized as a pass-through entity or a full blown ‘C’ corporation.

Families with multiple businesses in various life cycle stages are compelled to think very carefully about tax implications associated with their ‘portfolio’ of business entities.
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