Archive for Tax Cuts and Jobs Act

Tax Cuts And Jobs Acts: Impact On Businesses

The Tax Cuts and Jobs Act, a $1.5 trillion tax cut package, was signed into law on December 22, 2017. The centerpiece of the legislation is a permanent reduction of the corporate income tax rate. The corporate rate change and some of the other major provisions that affect businesses and business income are summarized below. Provisions take effect in tax year 2018 unless otherwise stated.

Corporate Tax Rates

  • Instead of the previous graduated corporate tax structure with four rate brackets (15%, 25%, 34%, and 35%), the new legislation establishes a single flat corporate rate of 21%.
  • The Act reduces the dividends-received deduction (corporations are allowed a deduction for dividends received from other domestic corporations) from 70% to 50%. If the corporation owns 20% or more of the company paying the dividend, the percentage is now 65%, down from 80%.
  • The Act permanently repeals the corporate alternative minimum tax (AMT).

Read More

Written by | Posted in Tax Cuts & Jobs Act • Tax Cuts and Jobs Act • Tax Cuts Jobs Act • TaxConnections

Section 199 Repeal Opportunities

With section 199 repealed for tax years beginning after 12/31/17, now is the time for a final review of domestic production activity deductions (“DPAD”).  A properly conducted review will optimize 2017 DPAD and identify refund opportunities in prior tax years.

With internal resources likely committed to 2017 compliance and implementation of the Tax Cuts and Jobs Act, chief tax officers should consider success-based-fee DPAD reviews for years prior to 2017.   Read More

Written by | Posted in Tax Cuts and Jobs Act

Additional Details About The Tax Reform Act

In last month’s newsletter we presented some general facets of the Tax Cuts and Jobs Act (TCJA). In this article, we will explore some portions of the new bill in greater detail.

In general, the law cuts corporate tax rates permanently and individual tax rates temporarily. It permanently removes the individual mandate, a key provision of the Affordable Care Act, and it changes other policies in dramatic ways, such as the SALT deduction (which will be explained in more detail below). Read More

Written by | Posted in Tax Cuts and Jobs Act

New Tax Bill May Eliminate Right To Deduct Fees Expended “In Connection With The Determination, Collection, Or Refund of any Tax”

All taxpayers, whether individuals or not, may deduct as business expenses the costs relating to tax matters that are ordinary and necessary in the conduct of their trade or business under Section 162 of the Internal Revenue Code.

However, certain non-business expenses are also deductible under Section 212, “Expenses for production of income.”  Notwithstanding the somewhat limiting title of Section 212, subsection (3) currently permits a deduction for non-business expenses that can have nothing to do with the production of income, namely expenses paid or incurred “in connection with the determination, collection or refund of any tax.”  Read More

Written by | Posted in Deductions • Tax Cuts and Jobs Act

New Tax Law Gives Pass-Through Businesses A Valuable Deduction

Although the drop of the corporate tax rate from a top rate of 35% to a flat rate of 21% may be one of the most talked about provisions of the Tax Cuts and Jobs Act (TCJA), C corporations aren’t the only type of entity significantly benefiting from the new law. Owners of noncorporate “pass-through” entities may see some major — albeit temporary — relief in the form of a new deduction for a portion of qualified business income (QBI). Read More

Written by | Posted in 2017 Tax Bill • Tax Cuts and Jobs Act • TaxConnections

President Trump’s “Tax Cuts and Jobs Act”

President Trump signed the “Tax Cuts and Jobs Act” into law on Dec. 22, as noted and summarized from a report by Investopedia. The Senate passed the bill on Dec. 20 by a party-line vote of 51 to 48. The House passed the bill later in the day by a vote of 224 to 201. No House Democrats supported the bill, and 12 Republicans voted no, most of them representing California, New York and New Jersey. (Taxpayers who itemize and rely on the state and local tax deduction in these high-tax states will have their state and local tax deductions capped at $10,000 or $5,000 if Married Filing Separate). Read More

Written by | Posted in Tax Cuts and Jobs Act

Meals, Entertainment, And Transportation May Cost Businesses More Under The TCJA

Along with tax rate reductions and a new deduction for pass-through qualified business income, the new tax law brings the reduction or elimination of tax deductions for certain business expenses. Two expense areas where the Tax Cuts and Jobs Act (TCJA) changes the rules — and not to businesses’ benefit — are meals/entertainment and transportation. In effect, the reduced tax benefits will mean these expenses are more costly to a business’s bottom line. Read More

Written by | Posted in Tax Cuts and Jobs Act

5 Ways The New Tax Law Affects Paying For College

The final version of the GOP tax bill that passed last month rewrites the tax code in many ways, eliminating deductions and adding new benefits. Some of these new provisions affect those paying for college. The final version of the GOP tax bill that passed last month rewrites the tax code in many ways, eliminating deductions and adding new benefits. Some of these new provisions affect those paying for college. Read More

Written by | Posted in 2018 Tax Law • College Funding • Tax Cuts and Jobs Act • TaxConnections

New Law Includes A Mixed Bag Of Benefits And Limits To Tax Breaks For Businesses

The Tax Cuts and Jobs Act (TCJA), which was signed into law on December 22, will broadly impact businesses of all sizes.

The bill significantly reduces the income tax rate for corporations and eliminates the corporate alternative minimum tax (AMT). It also provides a large new tax deduction for most owners of pass-through entities and significantly increases individual AMT and estate tax exemptions. And it makes major changes related to the taxation of foreign income.

You may even be able to utilize some enhancements on your 2017 tax return. Read More

Written by | Posted in 2018 Tax Law • Tax Cuts and Jobs Act

Planning For The New Business Interest Expense Deduction Limitation

As part of the Tax Cuts and Jobs Act (“TCJA”) signed into law on December 22, 2017, some important changes have been made with respect to the deductibility of business interest expense for tax years beginning after December 31, 2017. Under prior law, business interest expense was generally deductible in the year in which the interest was paid or accrued, except that corporations were subject to certain limitations under IRC Section 163(j) (“the earnings stripping rules”). TCJA created a new limitation, which replaces the “earnings stripping rules” and applies to all businesses, regardless of form, on the deductibility of net business interest expense that exceeds 30% of a taxpayer’s “adjusted taxable income.” Read More

Written by | Posted in Tax Cuts and Jobs Act

The Stealthy Increase In The Tax Cuts And Jobs Act Of 2017

Ever since the Reagan Administrative, tax brackets have been indexed for inflation. This avoids bracket creep when taxpayers move into a higher tax bracket because inflation pushes up their income. The thinking is that inflation increases are not real increases in earnings, so the rate tables should be indexed to avoid tax increases arising solely from inflation. This seems like less of an issue today with relatively tame inflation rates, but remember that inflation went into the teens in some years in the 1970’s making bracket creep a big issue. Read More

Written by | Posted in Tax Cuts and Jobs Act • TaxConnections

The Tax Cuts Jobs Act Temporarily Expands Bonus Depreciation

The Tax Cuts and Jobs Act (TCJA) enhances some tax breaks for businesses while reducing or eliminating others. One break it enhances — temporarily — is bonus depreciation. While most TCJA provisions go into effect for the 2018 tax year, you might be able to benefit from the bonus depreciation enhancements when you file your 2017 tax return. Pre-TCJA bonus depreciation Under pre-TCJA law, for qualified new assets that your business placed in service in 2017, you can claim a 50% first-year bonus depreciation deduction. Used assets don’t qualify. This tax break is available for the cost of new computer systems, purchased software, vehicles, machinery, equipment, office furniture, etc. Read More

Written by | Posted in Tax Cuts and Jobs Act • TaxConnections
« Older Entries   Recent Entries »