Annette Nellen - Tax Reform Changes

The Tax Cuts and Jobs Act enacted on December 22, 2017 was mostly effective starting in 2018. That was not enough time for anyone to get a good understanding of all of its over 100 changes and the effect and relevance.  The IRS has issued a lot of guidance, but there wasn’t enough time to even get all of this finalized by the time any estimated tax payments for 2018 returns were due.

If any practitioners have ever used Reg. 1.163-8T, 1.163-10T or temporary regulations under section 469, that’s a reminder that guidance for some areas changed or added by the Tax Reform Act of 1986 are not yet final!  And there are areas of many Code sections without sufficient guidance, such as Section 1202 added in 1993, but now widely used due to its now 100% gain exclusion (rather than the original 50%) and its reference in new Section 199A on the qualified business income deduction.
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UTILITIES AND TAX REFORM

One of the biggest benefits of the Tax Cuts and Jobs Act is the savings to customers of utility companies. According to research conducted by Americans for Tax Reform these are the rate savings for utilities this year. This is a great reminder we have savings to be thankful for this year.

Arizona Public Service (Phoenix, Arizona) 

The utility requested a $119 million bill reduction for customers due to tax reform.  APS has requested the Arizona Corporation Commission approve a $119 million bill reduction for customers, based on federal corporate tax cuts, effective February 1, 2018.

If approved, the $119 million decrease will offset the $95 million revenue increase that resulted from APS’s last rate review. The savings of $0.004258/kWh will be passed directly to customers through the Tax Expense Adjustor Mechanism (TEAM), a new adjustor mechanism that was included in the company’s rate review, and customer savings will vary with actual energy usage. APS customers would receive the credit on their monthly bill. – Jan. 9, 2018 Arizona Public Service press release

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IRS- Farmers And Ranchers

Many farmers and ranchers will benefit from tax law changes brought about by last year’s Tax Cuts and Jobs Act. Here are some of those changes along with details about how they will affect farmers and their bottom line:

Net Operating Losses:

  • These can now be carried forward indefinitely. Under prior law, they could only be carried forward 20 years.
  • NOL deductions are limited to 80 percent of taxable income.
  • They can be carried back for two years for farm and ranch businesses. Under prior law, NOLs could be carried back five years.

Qualified Business Income Deduction:

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