One provision of the 2017 Tax Cuts and Jobs Act (TCJA) that has generated considerable concern among business owners is the new limitation on deductions for business interest expenses.
Prior to the provision, interest paid on business loans or credit lines could be deducted as an ordinary business expense. One section of the Internal Revenue Code—Section 163(j)—limited the deductions for certain types of interest expense that some C corporations paid, but most businesses were able to fully deduct business interest expense in the year it was accrued or paid. (more…)
For many businesses, one of the most attractive features of the 2017 Tax Cuts and Jobs Act (TCJA) was the new Section 199A deduction for qualified business income (QBI). In practice, however, the QBI deduction has proven to be one of the TCJA’s more confusing provisions.
With one complete tax cycle behind us and some additional IRS guidance now available, this is a good time to review the law’s basic provisions and re-evaluate strategies for maximizing the QBI deduction for 2019. (more…)
While many changes in the Tax Cuts and Jobs Act (TCJA) involved rewriting entire sections of the tax code, some of the most consequential changes resulted from a simple change in definition. By expanding the definition of a “small business,” the law enabled many companies to simplify their tax preparation—and often improve their cash flow as well. (more…)
In this podcast, Chris Madrid from our Family Wealth and Individual Tax Planning Group discusses important modifications the Tax Cuts and Jobs Act made to the income taxation of trusts and estates for 2018 and beyond.
In December of 2017, the Tax Cuts and Jobs Act was enacted by Congress, which gave us the most sweeping and dramatic changes to the Internal Revenue Code in more than 30 years. The Act created the Internal Revenue Code Section 199A deduction which has the potential to help taxpayers reduce their liabilities with a 20% deduction against their “qualified business income”. Section 199A provides individual taxpayers and certain trusts and estates a deduction for qualified business income from a partnership, limited liability company, S-corporation, sole proprietorship, trust or estate. The deduction applies to tax years beginning after December 31, 2017 and before January 1, 2026. (more…)
UPDATED JULY 18, 2019: At Last…Partial Conformity…
In December 2017, Congress passed the Tax Cuts and Jobs Act (TCJA) which was the most significant tax reform legislation enacted since the 1980s. In July 2019, 18 months later, the California legislature acted and the governor signed Assembly Bill 91 that contained a select number of conformity provisions. These provisions will simplify tax compliance for California taxpayers as differing federal and California tax reporting for certain transactions will no longer be required. Unfortunately, California has yet to conform to most of the changes enacted by the TCJA.
The conformity changes included in AB 91 are highlighted below.
However, in an act of “reverse conformity,” the legislature passed Senate Bill 78. Originally, the federal Affordable Care Act imposed a “penalty tax” on taxpayers who did not have qualifying health insurance coverage. Congress repealed this “tax” effective January 1, 2019. But due to an act of reverse conformity, a “penalty tax” will once again be imposed on California taxpayers that do not have qualifying health insurance, effective January 1, 2020. (more…)
The Tax Cuts and Jobs Act (TCJA), signed into law in December 2017, made important modifications to the income taxation of trusts and estates for 2018 and beyond. Trust and estate income tax rates and brackets changed, along with deductibility of some estate and trust administrative expenses. Also, a new qualified business income deduction is available, under certain circumstances, that could be as much as 20% of qualified business income. (more…)
With all of the changes to the meals and entertainment deduction under the new tax law, we thought we would summarize the rules in this handy table. Please reach out to us if you have questions. (more…)
Now is the time to think about tax saving strategies that can be implemented before the end of the year. The Tax Cuts and Jobs Act passed by Congress in December 2017 will significantly impact year-end tax planning for 2018. Several traditional tax saving ideas are no longer effective and many new opportunities are available. Some our favorite ideas are discussed below. (more…)