Archive for Tax Cuts and Jobs Act

Fifth Anniversary Of Tax Cuts And Jobs Act – 12/22/22

ANNETTE NELLEN - Fifth Anniversary Of Tax Cuts And Jobs Act - 12/22/22

The Tax Cuts and Jobs Act (P.L. 115-97) was signed into law on December 22, 2017. This was a budget reconciliation bill so only needed 51 votes in the Senate rather than 60. Among many things, this means the official name of the bill has the word “reconciliation” in it (an act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018).

The TCJA was primarily intended to make the corporate tax system more internationally competitive by lowering the corporate rate (from a high of 35% to a flat 21%) and make the international system a semi-territorial one rather than worldwide.  But, not all businesses operate as C corporations and the TCJA included the §199A qualified business income deduction to provide a rate reduction for business income of sole proprietors, partners and others, with a few exceptions. But that provision is only in the law through 2025 while the 21% corporate rate is permanent (pending any congressional action to change it).

There are many temporary provisions in the TCJA, several of which are built-in tax increases. Here is most of that list:

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Tax Cuts And Jobs Act: Comparison For Large Businesses And International Taxpayers

Tax Cuts And Jobs Act: Comparison For Large Businesses And International Taxpayers

The Tax Cuts and Jobs Act (“TCJA”) made significant changes that affect international and domestic businesses, such as deductions, depreciation, expensing, tax credits and other tax items. This side-by-side comparison can help taxpayers understand the changes and plan accordingly.

Some provisions of the TCJA that affect individual taxpayers can also affect business taxes. Businesses and self-employed individuals should review tax reform changes for individuals and determine how these provisions work with their business situation.

Visit TCJA: International Taxpayers and Businesses regularly for tax reform updates. International and Domestic Businesses can find details and the latest resources on the provisions below at Tax Reform Provisions that Affect Businesses.

International Provisions

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Treasury Department And IRS Issue Guidance For Consolidated Groups Regarding Net Operating Losses

Treasury Department And IRS Issue Guidance For Consolidated Groups Regarding Net Operating Losses

The Department of the Treasury and the Internal Revenue Service issued proposed regulations and temporary regulations that provide guidance for consolidated groups regarding net operating losses (NOLs).

The Tax Cuts and Jobs Act (TCJA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) amended the rules for NOLs. After amendment, the NOL deduction is the sum of:

The total of the NOLs arising before January 1, 2018 (pre-2018 NOLs) that are carried to that year; plus
The lesser of:
The total of the NOLs arising after December 31, 2017; or
80% of taxable income less pre-2018 NOLs (the 80% limitation).
The TCJA generally eliminated NOL carrybacks and permitted NOLs to be carried forward indefinitely. The TCJA also provides special rules for nonlife insurance companies and farming losses. Nonlife insurance companies are permitted to carry back NOLs two years and forward 20 years, and the 80% limitation does not apply. Farming losses are permitted to be carried back two years and carried forward indefinitely, subject to the 80% limitation.
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Written by | Posted in CARES ACT • NOLs • Tax Cuts and Jobs Act • TaxConnections

Two Year Anniversary Of Tax Cuts And Jobs Act

Tax Cuts And Jobs Act Effects

On December 22, 2017, the Tax Cuts and Jobs Act (P.L. 115-97) was signed into law with most of it starting to be effective just ten days later. Give the roughly 115 changes in the law, that was a lot of work for the IRS to issue guidance on which is likely to take many years (we are still waiting for some guidance on the Tax Reform Act of 1986). It’s also a lot for taxpayers and tax professionals to deal with.

We likely need another year of data to know if the TCJA might stimulate the economy. According to the Congressional Research Service in a June 2019 report (page 14), the lowering of the top corporate rate from 35% to 21% led to a “record-breaking” amount of corporate stock buybacks.
For most individuals, the law did not add any complexity other than dealing with no more personal and dependency exemptions and that effect on wage withholding. A bigger complexity might be the IRS change to the Form 1040 including eliminating 1040-A and 1040-EZ. For about 15% of individuals, there is new complexity from new deduction and loss limitations.

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Treasury Fails To Prevent Lawsuit Against US Transition Tax From Proceeding

JOHN RICHARDSON - US Transition Tax

What Happened: The Judgement Is Here And Taxpayers Win!

About The Transition Tax

As part of the 2017 TCJA, Congress imposed a retroactive tax, without any realization event, on the retained earnings of Controlled Foreign Corporations. Although intended to be the the “trade off” for lowering the Corporate Tax rate from 35% to 21%, it was interpreted to apply to the small business corporations owned by Americans abroad. (The tax compliance industry aggressively promoted this damaging interpretation of the law.)

In any event, this imposed significant and life altering consequences on Americans abroad (particularly in Canada) for whom their small business corporations were really their pension plans. I documented the history, damage and madness of this in a series of posts about the transition tax. The law was interpreted (in various ways) and the regulations were drafted in an extremely punitive manner. What needs to be most understood is that a law intended for the Apples, Googles, etc. was interpreted to apply in the same way to individuals (your friends and neighbors) who owned small business corporations.

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Want To See Santa’s Previous Year Tax Return? Can You Advise Santa On The Tax Cuts And Jobs Act?

We know you will have some fun looking over Santa Claus’ previous year tax return. He has a great job gift giving and needs some help on his deductions. If you have any ideas of deductions he is able to take under the Tax Cuts And Jobs Act we would greatly appreciate your tax expertise.

This is an opportunity for tax professionals to chime in and be one of Santa’s helpers. TaxConnections will in turn promote you and your tax expertise. We will gift a one year TaxConnections Membership promoting your tax expertise to our visitors when you register for a one year membership before Christmas Day 2019. Limited Time!

Please add your commentary below after you see Santa’s Tax Form.

Want to see Santa’s Tax Form?

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TCJA Guidance Report from Treasury Inspector General For Tax Administration

Annette Nellen Regarding Treasury Inspector General Report

On May 14, TIGTA released a report, Status of the Office of Chief Counsel’s Issuance of TCJA Guidance. It reviewed the process for issuing guidance on the 100+ provisions of the Tax Cuts and Jobs Act (P.L. 115-97; 12/22/17). It also lists the guidance issued through the end of March (83 items) and what is expected from that date (95 items). A good amount of this includes Treasury Decisions, meaning final regs of the numerous proposed regs issued so far. Here is the detail of what they still plan to issue:

44 Treasury Decisions
35 NPRMs
4 Revenue Rulings
6 Revenue Procedures
4 Notice
1 Announcement
1 Undetermined

Appendices to the report list the specific topics of the guidance.

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Does TCJA Tax Churches? Should It?

Edward Zelinsky Taxing The Church

Does the new federal tax law, commonly known as the Tax Cut and Jobs Act (TCJA), tax churches as some have argued? If so, is this tax appropriate?

The answers are “yes” and “yes.” The TCJA provisions taxing qualified transportation fringes treat secular and religious employers alike, including houses of worship. In a world of imperfect choices, the TCJA reasonably treats all employers fairly without entangling church and state inordinately.

Churches (including all houses of worship such as synagogues, temples and mosques) pay more taxes than many people believe. Churches do not pay property taxes or basic income taxes. But churches do pay the employer portion of federal social security (FICA) taxes for their non-clergy employees. Churches also often pay or collect state sales taxes on the tangible personal property they sell or purchase. In most states, churches also pay real estate conveyance taxes like other real estate purchasers and sellers.

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Tax Cuts And Jobs Act: Comparison For Large Businesses And International Taxpayers

IRS LOGO TJCA

The Tax Cuts and Jobs Act (“TCJA”) made significant changes that affect international and domestic businesses, such as deductions, depreciation, expensing, tax credits and other tax items. This side-by-side comparison can help taxpayers understand the changes and plan accordingly.

Some provisions of the TCJA that affect individual taxpayers can also affect business taxes. Businesses and self-employed individuals should review tax reform changes for individuals and determine how these provisions work with their business situation.

Read More

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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.

 

 

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