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.
Archive for Tax Cuts and Jobs Act
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.
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.
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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
4 Revenue Rulings
6 Revenue Procedures
Appendices to the report list the specific topics of the guidance.
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.
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.
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.
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.
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.
Complimentary Courses For Corporate Tax Professionals: ASC 740 Tax Provision And Tax Cuts And Jobs Act
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.
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.
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.
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.