1. In Partnership with
January 23, 2018
#PBNTAXREFORMSUMMIT

2. IN PARTNERSHIP WITH
#PBNTAXREFORMSUMMIT

3. PARTNER SPONSOR
#PBNTAXREFORMSUMMIT

4. In Partnership with
January 23, 2018
#PBNTAXREFORMSUMMIT

5. Managing Partner, Tax Services
In Partnership with
Jay Sattler, CPA, MST
Managing Partner, Tax Services
BlumShapiro
#PBNTAXREFORMSUMMIT

6. Tax Legislation – Past, Present and Future
In Partnership with
Tax Legislation – Past, Present and Future
alliantgroup Vice Chairman; Former IRS Commissioner
Served as Commissioner of Internal Revenue from 2003 until 2007
Held Bush administration posts as Deputy Director for Management at the Office of Management and Budget
Served as Controller of the Office of Federal Financial Management
Featured in:
Mark W. EversOn

7. In Partnership with
January 23, 2018
#PBNTAXREFORMSUMMIT

8. Tax Legislation – Past, Present and Future
In Partnership with
Tax Legislation – Past, Present and Future
alliantgroup National Managing Director; Former Senior
Counsel to the Senate Finance Committee
Co-Leader of Tax Controversy Services at alliantgroup
Former Senior Counsel and Tax Counsel to the U.S. Senate Finance Committee
Worked closely with then-Chairman of the Senate Finance Committee, Senator Charles Grassley, and was involved in all major tax legislation signed into law
Featured in:
Dean zerbe

9. In Partnership with
January 23, 2018
#PBNTAXREFORMSUMMIT

10. Tax Changes and Implications of the New Legislation
In Partnership with
Tax Changes and Implications of the New Legislation
Jay Sattler, CPA, MST – BlumShapiro Managing Partner – Tax Services
Gregory Cabral, CPA, MST – BlumShapiro Rhode Island Office, Managing Partner
Alan Osmolowski, CPA – BlumShapiro Partner
Lynn O’Marra, Esq. – BlumShapiro Principal
Moderator
Corporations & Pass-Throughs
International Implications
Business Owners & Individuals
#PBNTAXREFORMSUMMIT

11. Managing Partner, Tax Services
In Partnership with
Moderator
Jay Sattler, CPA, MST
Managing Partner, Tax Services
BlumShapiro
#PBNTAXREFORMSUMMIT

12. Corporations & Pass-Throughs Managing Partner, RI Office
In Partnership with
Corporations & Pass-Throughs
Greg Cabral, CPA, MST
Managing Partner, RI Office
BlumShapiro
#PBNTAXREFORMSUMMIT

13. International Implications
In Partnership with
International Implications
Alan Osmolowski, CPA
Partner
BlumShapiro
#PBNTAXREFORMSUMMIT

14. Business Owners & Individuals
In Partnership with
Business Owners & Individuals
Lynn O’Marra ESQ, MBA
Principal
BlumShapiro
#PBNTAXREFORMSUMMIT

15. Tax Changes and Implications of the New Legislation
In Partnership with
Tax Changes and Implications of the New Legislation
Jay Sattler, CPA, MST – BlumShapiro Managing Partner – Tax Services
Gregory Cabral, CPA, MST – BlumShapiro Rhode Island Office, Managing Partner
Alan Osmolowski, CPA – BlumShapiro Partner
Lynn O’Marra, Esq. – BlumShapiro Principal
Moderator
Corporations & Pass-Throughs
International Implications
Business Owners & Individuals
#PBNTAXREFORMSUMMIT

16. Corporations and Pass-Through Entities
In Partnership with
Corporations and Pass-Through Entities
#PBNTAXREFORMSUMMIT

17. Flow Through Businesses and C Corporations
In Partnership with
Flow Through Businesses and C Corporations
20% Pass-through Deduction
Corporate Alternative Minimum Tax
Other Flow-through Business Items
C Corporation Items
Accounting Methods
Fixed Assets
Interest Expense Limitation
#PBNTAXREFORMSUMMIT

18. Qualified Business Income (QBI) Amount
In Partnership with
Qualified Business Income (QBI) Amount
AKA 20% pass-through deduction
Qualified Business Income “QBI” New section 199A
Rental would qualify?
Limited to lower of 20% of QBI or greater of 50% of W-2 wages, or 25% of W-2 wages, plus 2.5% of the unadjusted basis of the LLC’s assets
Does not include STCG, LTCG interest, dividends
Excludes specified service businesses in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services and brokerage services
#PBNTAXREFORMSUMMIT

19. Qualified Business Income (QBI) Amount
In Partnership with
Qualified Business Income (QBI) Amount
Threshold amount $315,000 of taxable income (MFJ)
If meet threshold previous limit based on W-2 wages and type of business rules are not applicable
Applied at the shareholder and partner level
#PBNTAXREFORMSUMMIT

20. Qualified Business Income (QBI) Amount
In Partnership with
Qualified Business Income (QBI) Amount
Example of 20% Deduction:
QBI: $1,000,000
W-2 wages: $800,000
Deduction: $200,000
#PBNTAXREFORMSUMMIT

21. Other Flow Through Business Items
In Partnership with
Other Flow Through Business Items
S Corporation terminated within two years of enactment
Distributions treated as from AAA and E&P
Partnership technical termination repealed
#PBNTAXREFORMSUMMIT

22. C Corporation Items AMT repealed for years beginning after 12/31/2017
In Partnership with
C Corporation Items
AMT repealed for years beginning after 12/31/2017
Prior year minimum tax credit eligible for years beginning after 2017 and before 2022
50% of amount not used now refundable
All corporate tax rates reduced to a flat 21%
Reduces Dividends Received Deduction
#PBNTAXREFORMSUMMIT

23. In Partnership with
Accounting Methods
Taxpayers with average gross receipts less than $25m
Average based on prior three years
Cash method
Exempt for Accounting for Inventory
Treat as Materials and Supplies that are not incidental
Conform to financial accounting treatment
Exempt from UNICAP
Completed contract method of long term contracts
Changes in accounting method
#PBNTAXREFORMSUMMIT

24. Fixed Assets 100% expensing election Luxury auto limits increased
In Partnership with
Fixed Assets
100% expensing election
Qualified property placed in service after 9/27/2017 and before 1/1/2023
Percentage expensing decreases after 12/31/2022 to zero at 12/31/2026
Can elect 50% in lieu of 100% for qualifying property placed in service in the first tax year ending after 9/27/2017
Luxury auto limits increased
Qualified improvements given a 15-year recovery period
Section 179 increased to $1.0m and phase out limit $2.5m
#PBNTAXREFORMSUMMIT

25. Interest Expense Limitation
In Partnership with
Interest Expense Limitation
Limitation is sum of:
Business Interest Income
30% of business’s adjusted taxable income
Floor plan financing
Businesses with less than $25m average receipts - Exempt
Amount disallowed is carried forward
Adjusted Taxable Income does not include:
Net operating losses
Section 199A deduction
Depreciation, amortization or depletion
#PBNTAXREFORMSUMMIT

26. Other Business Provisions
In Partnership with
Other Business Provisions
Net Operating Losses
Carryback eliminated, Carryforwards unlimited
NOL deduction limited to 80% of taxable income
DPAD repealed
Like-Kind Exchanges of Real Property
Only real property eligible
#PBNTAXREFORMSUMMIT

27. Other Business Provisions (cont.)
In Partnership with
Other Business Provisions (cont.)
Meals and Entertainment
No deduction for entertainment
Expands meals for the 50% deduction
Self-created property - Not capital asset
Patent, Invention, Model, Design, Formula or Process
#PBNTAXREFORMSUMMIT

28. Flow Through Business Example
In Partnership with
Flow Through Business Example
Taxable Income Before Interest Expense
$1,000,000
Interest Expense
$500,000
W-2 Wages
Depreciation Expense
$400,000
Prior Law
Tax Reform Act
Deductible Interest Expense
$420,000
QBI Amount $0
$116,000
Taxable Income
$464,000
Tax
$143,231
$111,738
Savings
$31,493
#PBNTAXREFORMSUMMIT

29. C Corporation Example #PBNTAXREFORMSUMMIT
In Partnership with
C Corporation Example
Taxable Income Before Interest Expense
$1,000,000
Interest Expense
$500,000
W-2 Wages
Depreciation Expense
$400,000
Prior Law
Tax Reform Act
Deductible Interest Expense
$420,000
QBI Amount $0
Taxable Income
$580,000
Tax
$170,000
$121,800
Savings
$48,200
#PBNTAXREFORMSUMMIT

30. International Taxation
In Partnership with
International Taxation
#PBNTAXREFORMSUMMIT

31. How We Got Here U.S. rates much higher than rest of the world
In Partnership with
How We Got Here
U.S. rates much higher than rest of the world
Trillions of dollars kept offshore in low tax jurisdictions
Less innovation in U.S. since IP would be taxed at higher rate
#PBNTAXREFORMSUMMIT

32. Change to Territorial Tax System
In Partnership with
Change to Territorial Tax System
Most other OECD countries use territorial system
US regime still has some elements of worldwide system
100-percent DRD for the foreign dividends received by a U.S. corporation
DRD does not apply to S corporations
#PBNTAXREFORMSUMMIT

33. Tax on Accumulated Foreign Earnings
In Partnership with
Tax on Accumulated Foreign Earnings
One-time toll charge on previously untaxed foreign earnings
Mandatory repatriation of accumulated earnings going back to 1986
Accumulated losses can be aggregated with accumulated foreign earnings
#PBNTAXREFORMSUMMIT

34. Mandatory Repatriation Tax
In Partnership with
Mandatory Repatriation Tax
Reduced tax rate
Foreign E&P attributable to cash and other liquid assets taxed at 15.5%
Residual foreign E&P taxed at 8%
Foreign tax credits can be used to offset the repatriation tax
State tax?
#PBNTAXREFORMSUMMIT

35. Timeline for Payment of Tax
In Partnership with
Timeline for Payment of Tax
Up to 8-year deferral
For 2017 calendar year corporation first payment of repatriation tax is in effect due April 15, 2018
Will need to await guidance from state and local jurisdictions
#PBNTAXREFORMSUMMIT

36. Global Intangible Low-taxed Income
In Partnership with
Global Intangible Low-taxed Income
Global intangible low-taxed income (GILTI)
Subpart F income
Carrot and stick approach to taxation of IP and foreign sales
Net % minimum tax?
Deductions allowed for U.S. income generated from foreign sources (FDII)
#PBNTAXREFORMSUMMIT

37. In Partnership with
GILTI or Innocent?
Tax imposed on income above a deemed “routine” return
Adjusted tax basis in foreign tangible property X10% is deemed “routine return”
Foreign profits above that base threshold subject to inclusion in U.S. income
#PBNTAXREFORMSUMMIT

38. GILTI Related Deductions
In Partnership with
GILTI Related Deductions
50% of GILTI is allowed as deduction
Also deduction allowed for 37.5% revenue derived from foreign sources (FDII)
Intention was to get closer to 12% rate
Foreign tax credit – can claim a credit for up to 80% of foreign taxes on inclusion amount
GITI and FDII net ETR %
#PBNTAXREFORMSUMMIT

39. Deductions for Foreign Derived Intangible Income
In Partnership with
Deductions for Foreign Derived Intangible Income
FDII = U.S. income derived from sales or services provided to foreign unrelated entities
37.5% FDII plus 50% GILTI amount allowed as a deduction to U.S. corporations
Deductions reduced in 2025 to % FDII and 37.5% GILTI amount
#PBNTAXREFORMSUMMIT

40. Applies to C Corps FDII and GILTI deductions are not available for:
In Partnership with
Applies to C Corps
FDII and GILTI deductions are not available for:
Individuals
RICs
REITs
S corporations
#PBNTAXREFORMSUMMIT

41. Effective Tax Rates FTC against GILTI tax limited to 80%
In Partnership with
Effective Tax Rates
FTC against GILTI tax limited to 80%
IP in U.S., the 37.5% FDII deduction available
After FDII - effective tax rate of % on U.S. based IP income
GILTI effective rate %
#PBNTAXREFORMSUMMIT

42. In Partnership with
S Corporations
S corporation required to compute its income in the same manner as in the case of an individual
GILTI is includible in S Corp. income
The FDII and GILTI deductions only available to C corporations
DRD not available to S Corporations
#PBNTAXREFORMSUMMIT

43. We Got the BEAT New base erosion anti-avoidance tax (BEAT)
In Partnership with
We Got the BEAT
New base erosion anti-avoidance tax (BEAT)
Gross receipts threshold - $500 million
Does not apply to S corporations
In general, BEAT reduces the benefit a U.S. corporation receives from taking tax deductions for payments to a foreign affiliate
2026 the BEAT increases to 12.5%
#PBNTAXREFORMSUMMIT

44. What Does This Mean for My Business
In Partnership with
What Does This Mean for My Business
ASC 740 – date of enactment
Need for modelling and doing projections
C vs. S
Repatriation tax due 4/15/2018
E&P analysis for 30 years needed
What are the state tax implications of federal income inclusion relative to mandatory repatriation
#PBNTAXREFORMSUMMIT

45. Business Owners and Individuals
In Partnership with
Business Owners and Individuals
#PBNTAXREFORMSUMMIT

46. Questions We’re Receiving
In Partnership with
Questions We’re Receiving
Are the individual changes permanent?
Are itemized deductions dead?
We can still deduct charitable contributions, right?
What about that pesky AMT?
What tax rates will apply to me?
What other changes should I be aware of?
What are the estate/gift tax changes?
Will my taxes go up or down?
#PBNTAXREFORMSUMMIT

47. Are the Individual Changes Permanent?
In Partnership with
Are the Individual Changes Permanent?
No!
Most are effective for 2018 through 2025
Sunset to old rules beginning in 2026
#PBNTAXREFORMSUMMIT

48. Are Itemized Deductions Dead?
In Partnership with
Are Itemized Deductions Dead?
Doubling of standard deduction
Elimination/limit on itemized deductions
State & local income and property tax ($10k cap)
2% miscellaneous itemized deductions disallowed
Mortgage ($750k) and home equity interest
Medical deduction AGI threshold lowered to 7½ percent ( )
Pease phase-out limit eliminated
Elimination of personal exemptions
#PBNTAXREFORMSUMMIT

49. We Can Still Deduct Charitable Contributions, Right?
In Partnership with
We Can Still Deduct Charitable Contributions, Right?
Increase in AGI limit for cash gifts (60%)
What about everything on the last slide?
Bunching contributions
Still opportunity for those over 70 ½ with IRAs
#PBNTAXREFORMSUMMIT

50. What About That Pesky AMT?
In Partnership with
What About That Pesky AMT?
Not repealed
Increased exemption ($109,400 MFJ; $70,300 Single)
Increased exemption phase-out limits ($1M MFJ; $500k Single)
Not as many AMT adjustments
Faster use of prior year AMT credits?
#PBNTAXREFORMSUMMIT

51. What Tax Rates Will Apply to Me?
In Partnership with
What Tax Rates Will Apply to Me?
Still 7 tax rates (10%, 12%, 22%, 24%, 32%, 35%, 37%)
Slightly lower rates and wider brackets
Additional marriage penalty relief
No change in long-term capital gains and qualified dividend rates
Kiddie tax changes
Child tax credit increased and expanded
Medicare surcharge and Net Investment Income Tax still apply
#PBNTAXREFORMSUMMIT

52. What Other Changes Should I Be Aware Of?
In Partnership with
What Other Changes Should I Be Aware Of?
529 plan distribution for K-12
Alimony (2019)
Disallowance of excess business losses
Elimination of health insurance penalty (2019 +)
Elimination of moving expense deduction/exclusion
#PBNTAXREFORMSUMMIT

53. What Other Changes Should I Be Aware Of?
In Partnership with
Casualty & theft losses
Carried interest
Roth IRA conversion recharacterizations
Qualified equity grants
ABLE account changes
#PBNTAXREFORMSUMMIT

54. What Are the Estate/Gift Tax Changes?
In Partnership with
What Are the Estate/Gift Tax Changes?
Doubling of exemptions
Estate/Gift
GST
Basis step up still applies
What happens if the exemption decreases in 2026?
Good planning dictates flexibility
#PBNTAXREFORMSUMMIT

55. Will My Taxes Go Up or Down?
In Partnership with
Will My Taxes Go Up or Down?
Every situation is different
Opposing forces in new tax law
Generalizations
Most high income taxpayers will see decrease in tax
Some in the middle will see tax increase
Child tax credit will make the difference for many families
#PBNTAXREFORMSUMMIT

56. In Partnership with
January 23, 2018
#PBNTAXREFORMSUMMIT

57. Stay Informed Taxreform.blumshapiro.com
In Partnership with
Stay Informed
Upcoming Webinars:
2/20 | 11:00 am | Tax Reform for Pass-Through Entities 
2/22 | 11:00 am | Changes for Corporations
2/26 | 11:00 am | Global Impact of Tax Reform  
2/28 | 11:00 am | Individual Impact of Tax Reform
Taxreform.blumshapiro.com
#PBNTAXREFORMSUMMIT

58. In Partnership with
PANELISTS CONTACT INFO.
Greg:
Jay:
Lynn :
Alan:
#PBNTAXREFORMSUMMIT

59. Panel Discussion / Q & A #PBNTAXREFORMSUMMIT Mark Everson alliantgroup
In Partnership with
Panel Discussion / Q & A
Mark Everson
alliantgroup
Dean Zerbe
alliantgroup
Jay Sattler
BlumShapiro
Greg Cabral
BlumShapiro
Lynn O’Marra
BlumShapiro
Alan Osmolowski
BlumShapiro
#PBNTAXREFORMSUMMIT

60. thank you… #PBNTAXREFORMSUMMIT Mark Everson alliantgroup Dean Zerbe
In Partnership with
Mark Everson
alliantgroup
Dean Zerbe
alliantgroup
Jay Sattler
BlumShapiro
Greg Cabral
BlumShapiro
Lynn O’Marra
BlumShapiro
Alan Osmolowski
BlumShapiro
thank you…
#PBNTAXREFORMSUMMIT

61. thank you…
IN PARTNERSHIP WITH
#PBNTAXREFORMSUMMIT

62. thank you…
PARTNER SPONSOR
#PBNTAXREFORMSUMMIT

63. In Partnership with
January 23, 2018
#PBNTAXREFORMSUMMIT