Welcome to the Cerini And Associates 2018 Tax Change Blog! In December 2017 Congress passed and the President signed the Tax Cuts and Jobs Act, which will impact virtually all taxpayers in the United States. Over the coming months, we will be regularly updating this blog to provide helpful and meaningful information on these tax law changes, looking at specific provisions & law changes and how these changes will affect certain industries as a whole. We will be pushing these changes out often during our Essential Bulletin and via our mailing lists, so please click here to sign up.
Basics and Background
The first draft of current law was originally circulated by House members in November 2017, with a Senate version coming in December 2017. The two houses reconciled and voted on the law in late December 2017, with the majority of the provisions to be effective January 1, 2018. To find our initial thoughts on those bills, please click for either the House or Senate versions of the bills. During the reconciliation process many changes occurred from these bills and even from prior drafts, resulting in a lot of dated information and confused taxpayers as to what the final laws entail. The speed of these changes was rapid and unprecedented, which only added to the confusion.
Law Status as of February 9, 2018
As of February 9, 2018, the laws have been in effect for over a month, which has given us time to begin to digest and update our models related to these drastic changes. However, the story is very much incomplete. While the law has been passed, the regulations that help to guide the enforcement of these laws are still pending, leading to frustrating ambiguity and an inability to take meaningful action on these new laws.
As the regulations, forms and pertinent rulings from the IRS become available as it relates to these laws we will be sure to post updates to our tax change blog. The increased guidance should hopefully help to answer many of the burning questions of both taxpayers and the Tax and Business Advisory Team at Cerini and Associates.
Brief Summary of Major Individual Taxation Changes
- Reduction in Individual Income Tax Rates
- Increase in AMT Exemption Amount
- Elimination of the Individual Mandate
- Increase in Standard Deduction Amounts
- $10,000 cap on State and Local Tax (SALT) Deductions
- Increased cap on mortgage interest deductions
- Elimination of miscellaneous deductions, including Unreimbursed Employee Expenses (including Home Office Deductions)
- Elimination of Personal and Dependency Exemptions
- Increased Child Tax Credits
- Changes in the Taxation of Alimony
- Elimination of Moving Expense Deductions
- Deferral of Taxation on Certain Options Exercises
Brief Summary of Business Taxation Changes
- Reduction of Corporate Income Tax Rate to 21%
- Elimination of Corporate AMT
- Reduction of the Dividends Received Deduction
- A 20% Deduction for Qualified Business Income on taxpayers personal returns
- Elimination of the Technical Termination Provisions
- Increase in Section 179 Expensing
- Increase in Bonus Depreciation
- Change in definition and life of certain improvements
- Limitations on Interest Deductions
- 80% limit for Net Operating Loss Deductions
- Elimination of Net Operating Loss Carrybacks
- Elimination of Entertainment Expense Deductions
- Required Capitalization and Amortization of R&D Expenses after 2021
- Increased availability of Cash Method accounting and non-requirement to use UNICAP or inventory accounting
As mentioned, we plan to cover in greater detail these changes and any planning opportunities that may arise in the coming months. We want to make sure that you are getting relevant, timely, accurate and actionable information.