I’d Like A Clearer Picture of Tax Reform

A good goal for all.

As the largest tax reform legislation in the past 30 years becomes reality, it is important to stay up-to-date on year-end planning opportunities and how reform may impact you and your business.

Tax reform presents the prospect of lower effective income tax rates, encouraging taxpayers to embrace the usual tenets of tax planning more than ever. A few possible considerations include:  

  • Defer income and accelerate deductions by identifying opportunities for bad debts, installment sales, certain prepaid expenses, accrued bonuses, and cost segregation studies, utilizing expiring credits and deductions (such as state income taxes where AMT is not an issue), pre-funding future years’ donations (i.e. donor advised funds), selling loss assets, utilizing like-kind exchanges, maximizing retirement plan contributions, and making favorable changes to accounting methods.
  • For estate planning, generally avoid incurring gift taxes on transfers in light of the higher basic exclusion amount and possible repeal of the estate tax (consider GRATs and sales to defective grantor trusts and transfers).
  • And, don’t forget about AMT, potential limitations and state tax conformity issues.

Business Impact
There are many business considerations, including the corporate tax rate, pass-through income, limitations on net interest expense, full expensing of business assets, changes to net operating loss deductions, limitation of like-kind exchanges, limitation on deductibility of FDIC premiums, corporate alternative minimum tax, rules for recognition of income, changes to business tax credit, the modified limit on excessive compensation, and the modified deduction for meals and entertainment expenses. 

Individual Impact
Individuals will have changes to their ordinary income tax rates, the ACA mandate, their exemptions and deductions, individual AMT, limitation on losses, and estate and generation-skipping transfer taxes.

An Informed Approach
If you’re interested in staying up-to-date with important tax news and legislative updates that may impact your business or individual situation, please sign up to receive our tax updates, register for an upcoming Tax Trends session, or view the many resources we have available on our website, blogs and industry-specific newsletters. We will continue to add insights of relevance with action items for businesses and individuals to consider as they plan for the future.

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