10 Ways the Tax Law Changes Might Impact You

Earlier this month we were excited to attend the Tax Cut & Jobs Act Tax Reform Panel: New Rules and New Opportunities.

This panel of experts from various Santa Barbara businesses presented an analysis of the new tax reform laws and how they might impact you and your business (see sponsors and panelists below).

We wanted to pass along this expert information!

Top Ten Most Important Tax Law Changes:

1. Reduction in corporate tax rates to 21%
2. 20% deduction for qualified business income replacing Domestic Production Activities Deduction (DPAD)
3. More liberal depreciation deductions (section 179 and bonus depreciation)
4. Modest decreases in individual ordinary income tax and capital gain tax rates
5. Near elimination of state and local tax deduction (SALT) through a limit of $10,000
6. Elimination of miscellaneous itemized deductions and stricter limits on the mortgage interest deductions
7. Increased exemption from Alternative Minimum Tax (AMT) for taxpayers making less than $1 million
8. Doubling of estate and gift exclusions to $10 million per person
9. Ordinary incomes taxes imposed on the sale of intellectual property
10. Three year holding period for capital gains for carried partnership profits interest

What will this do to me?

If you are a C-Corp you will see your tax rates reduced. If you have a different corporate structure you might look into the possibility of restructuring your entity to become a C-Corp (but probably not).

Under the more liberal depreciation deductions, all real estate may benefit from doing a bonus depreciation study in order to access better immediate gains.

While the near elimination of state and local tax deductions will impact people in the state of California, the impact is not as great as feared and will only mainly impact high net-worth individuals.

If you are a sole proprietorship, estate/trust, partnership, S-corp, or other (non-C-Corp) small business with a taxable income of less than $300K you may benefit from the deduction for qualified business income of passes-through entities. You should make sure to record hiring people and buying equipment so that you can access these benefits.

Who are the Experts?

This event was sponsored by Ameriflex Financial Services, American Riviera Bank, Nasif, Hicks, Harris & Co. (https://nhhco.com), and Reicker Pfau, the event was composed of Justin R. Anderson the president of Ameriflex, Jeffery P. Harris and Jody Dolan Holehouse Partners at Nasif, Hicks, Harris & Co., LLP, and Michael E. Pfau Partner at Reicker Pfau, Pyle & McRoy.

All of the notes above were passed on by these fine professionals, so please don’t take these notes as legal or tax advice from Accountix.

If you still have questions…

We will always recommend reaching out to your CPA to determine the specifics of how tax laws will impact you but we hope that this quick gloss-over was helpful in getting the conversation started.

If you would like references to professionals that can help you in your situation, don’t be shy about reaching out to us!

As business advisors and bookkeepers, we don’t give tax advice or file your State & Federal returns for you. We can, however, prepare year-end CPA support that will help to reduce CPA fees and can provide business advisory services that keep you on track all year round for strong business growth.