1. Presentation by Taxation Business Committee 6.22.2017
Upcoming Tax Reform
Presentation by Taxation Business Committee

2. Proposed Tax Reform Current House Blueprint Trump Plan
Corporate Tax Rate
35%
20%
15%
Individual Tax Top Marginal Rate
Ordinary Income: 39.6%
Capital Gains/Dividends: 20%-23.8%
Pass-Through Rate: 0%
AMT Regime
Ordinary Income: 33%
Capital Gains/Dividends: 16.5%
Pass-Through Rate: 25%
AMT Regime Repealed
Ordinary Income: 35%
Capital Gains/Dividends: 20%
Pass-Through Rate: 15%
Net Investment Income Tax (NII)
3.8% 0%
Interest Deduction
All Interest Deductible Subject to a Number of Limitations
Deductible up to Interest Income Only
Elect: Deduct Interest or Capital Expenditures
Capital Expenditures
Depreciated Over Life of Asset
Full Cost Immediately Deducted (other than land)
Carried Interest
Capital Gains Rate (20% %)
No proposal
Ordinary Income Rates (35% is the Highest Marginal Rate)
Historical CFC Earnings
No Tax Until Repatriation
One-time Tax of 8.75% (Earnings Held in Cash or Equivalents); 3.5% (Other). Payable in Installments over 8 Years
One-time Tax of 10% on All unrepatriated Foreign Earnings
Future CFC Earnings
Immediate Taxation of Subpart F Income; Other Income Deferred
Territorial Tax System

3. Tax Planning Opportunities
Accounting methods can result in permanent tax savings
Accelerate deductions (ex: year-end bonus, prepaid expenses)
Defer recognition of income
Deferral or acceleration x difference in rate = permanent benefit
Utilization of tax attributes (ex: NOLs)
E&P Planning for CFCs to reduce repatriation “toll charge”

4. Comments Reduced Corporate Tax rate
would help attract increased investments from abroad
reduce the incentive for MNC’s to book profits offshore
Reduced rate for flowthrough income
would spur both job growth and the economy
creates strong incentives for owners to hold investments or earn income leading to possible abuse
gives the IRS greater incentive to challenge payments made to owners
provisions may be needed to prevent abuses

5. Update
Trump administration is aiming for tax reform legislation this fall
A unified proposal or discussion has not yet been unveiled
There appears to be a lack of consensus among House and Senate lawmakers, as well as top tax officials leading tax reform efforts within the Trump administration.
There is a significant level of uncertainty in terms of the overall direction, detail, timing, and transition of reform.