RE: Professional Analysis of the New Tax Bill
Really trying to kill off itemized deductions. Miscellaneous itemized subject to the 2% floor is suspended. Casualty losses unless it is a federal disaster zone is suspended. Taxes are limited to $10,000. Mortgage interest limited to loan of 750k. Standard deduction goes up to 24k. They tried to kill off the medical deduction but backed off on that.
AMT not really changed that much. For joint returns the exemption is only up from 86,200 to 109,400. The phaseout of the exemption is raised to $1,000,000. That will be some help to the upper middle class. But the lower tax rates will snag some people. A 28% AMT isn't a big deal if you are taxed at 39.6% unless you have a huge number of preference items. But when you are at 22, 24 and 32%, it can have more of an impact. It remains to be seen how much the bite has been reduced.
This section, the 20% deduction for business income in pass through entities, is going to cause massive complexity and lots of planning revenues for accountants and lawyers:
"...New law. Generally for tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the Act adds a new section, Code Sec. 199A, “Qualified Business Income,” under which a non-corporate taxpayer, including a trust or estate, who has qualified business income (QBI) from a partnership, S corporation, or sole proprietorship is allowed to deduct:
(1) the lesser of: (a) the “combined qualified business income amount” of the taxpayer, or (b) 20% of the excess, if any, of the taxable income of the taxpayer for the tax year over the sum of net capital gain and the aggregate amount of the qualified cooperative dividends of the taxpayer for the tax year; plus
(2) the lesser of: (i) 20% of the aggregate amount of the qualified cooperative dividends of the taxpayer for the tax year, or (ii) taxable income (reduced by the net capital gain) of the taxpayer for the tax year. (Code Sec. 199A(a), as added by Act Sec. 11011)..."
|