As you know, President Trump signed the Tax Reduction Act into law on December 22, 2017. Now that the dust has settled, businesses and individuals should take note of the more significant changes.
The new law will significantly reduce corporate federal income tax rates from a maximum rate of 35% to a maximum rate of 21% for tax years beginning after December 31, 2017.
New entity selection planning is now more important as many business ventures may benefit from a 20% tax rate on certain types of pass-thru income.
The new law eliminates a taxpayer’s ability to deduct payments and legal fees relating to settlement of sexual harassment claims if the settlement is subject to a non-disclosure or confidentiality clause.
Like-kind Exchanges (Section 1031) entered into after December 31, 2017 will be limited to exchanges of real property. Tax free exchanges of artwork, collectibles, boats and airplanes will no longer be available for like-kind exchanges. There will be a transition rule for transactions that have been initiated by December 31, 2017.
Tax rates have also been reduced but the code will retain 7 graduated brackets ranging from a low of 10% to a high of 37%.
The Standard Deduction for individual taxpayers will almost double in amount from their current levels BUT there will be new limitations on itemized deductions for state, local tax or property taxes capped at $10,000. Also home mortgage interest will only be deductible on loans up to $750,000 in value.
The new law has eliminated the personal exemption for tax years after December 31, 2017.
Estate and Gift Taxes have also been revised to double the lifetime exemption from $5 million to $10 million (indexed for inflation) which creates additional estate and gift tax planning opportunities for many of our clients.
The items listed above are just a few of the changes in this new tax law. Tax and Estate plans should be revisited as planning put in place under the prior tax laws may now be in need of adjustment. Riley Riper Hollin & Colagreco is ready to assist you with your estate and income tax planning, entity selection planning and tax planning for transactions to help you take advantage of the opportunities under the new law.
Please contact Bob Cohen at firstname.lastname@example.org or 610-458-4400, Ext. 231 if you would like to schedule an appointment to discuss your individual situation.
PROPOSED TAX REFORM HIGHLIGHTS
It appears with Healthcare Reform now on the “back-burner” the Administration is pressing forward with its much anticipated tax reform. Below are some of the major highlights that are being proposed.
1. Corporate Tax Rate – Corporate maximum tax rate of 20%.
2. Tax Rate on Flow-Through Business Income – Flow through entity tax rate of 25% on business income after reasonable compensation income.
3. Individual Tax Rate – Individual maximum tax rate of 35% and elimination of the 3.8% Medicare surtax on Investment Income.
4. AMT – Repeal of the Corporate and the Individual Alternative Minimum Tax (AMT).
5. Itemized Deductions – Elimination of most itemized deductions except for Mortgage interest and Charitable Contributions (but doubling of the standard deduction).
6. Capital Expensing – Immediate expensing of new investments in depreciable assets (other than structures), made after 9/27/17, for at least five years.
7. Interest Expense – Partial limitation of interest expense incurred by a C corporation (no detail here) and consideration of appropriate treatment of non-corporate taxpayers.
8. Domestic Production (Manufacturing) Deduction – Elimination of the Section 199 domestic production (manufacturing) deduction due to the lower tax rate incentive.
9. R&D Tax Credit – Continued ability to claim the R&D tax credit.
10. Estate Tax – The Estate tax and Generation Skipping Tax (GST) will be repealed but there is no mention of the gift tax.
Based on the current tax reform proposals, year-end tax planning can yield significant tax savings. RRHC attorneys have the business and tax expertise to assist you with your estate planning and business planning. Please contact Bob Cohen at email@example.com if you would like to discuss your individual or business situation and gain a better understanding of how these proposals may affect you.
The Pennsylvania Supreme Court issued an opinion today in Valley Forge Towers Apartments N, LP, et al. v. Upper Merion Area School District, et al. deciding that taxing authorities are not permitted to selectively appeal only the assessments of commercial properties, such as apartment complexes, while choosing not to appeal the assessments of other types of property, such as residential properties.
The Supreme Court held that the statute which permits taxing authorities, such as the school districts, to file assessment appeals, is valid. Nevertheless, that authority violates the Pennsylvania Constitution if the district chooses to selectively challenge one classification of property to the exclusion of others.
The Upper Merion School District had argued that there was no violation of the Uniformity Clause of the Pennsylvania Constitution where the School District evaluated the properties within its district and pursued appeals only where it made economic sense to do so. The School District chose only to challenge commercial property assessments. Commercial property owners argued that this practice unfairly and unconstitutionally targeted only commercial properties, to the exclusion of underassessed residential properties, and the Supreme Court agreed.
This decision may have a far reaching impact on the school districts’ current practice of filing appeals on commercial properties, particularly those recently the subject of a sale. Please contact Jane Richardson at (610) 458-4400 with questions or for more information.
Riley Riper Hollin & Colagreco is pleased to welcome Gina Gerber to the firm. Gina, named Main Line Today Magazine‘s “Top Real Estate Lawyer” in 2016, has extensive experience in negotiating and securing development entitlements for property owners and developers throughout the region. She concentrates her practice in the areas of land use, zoning and real estate. Continue reading “Gina Gerber Joins Riley Riper Hollin & Colagreco Team”
The Chester County Commercial Industrial Investment (CII) Council featured Edward J. Hollin, a shareholder at Riley Riper Hollin & Colagreco, as a panelist in an educational briefing, “Contracts and Booby Traps: How to Avoid Legal Issues in CRE Brokerage.” Over 60 professionals from commercial real estate gathered to attend the event on May 17 at the Chester County Economic Development Council. Continue reading “CII Council Features Edward Hollin in Educational Briefing”
Ed Hollin, a shareholder at Riley Riper Hollin & Colagreco, was recognized for his role representing The Hankin Group in negotiating a transaction which was recognized as the “most significant flex lease” in Chester County at the Chester County Commercial Industrial Investment (CII) Council’s Annual Meeting & Luncheon on April 20. Continue reading “Ed Hollin Recognized with “Most Significant Flex Lease” Award in Chester County”
As Chairman of the Southern Chester County Chamber of Commerce, John Jaros presented the 2016 Outstanding Citizen of the Year Award to Leon R. Spencer, Jr. at the organization’s 50th Annual Gala on March 24 at Longwood Gardens.
“Leon Spencer is a gentleman, a community volunteer and a class act as well,” said Jaros. “I couldn’t think of a better recipient of the award this year than Leon. His acceptance speech was moving.” Continue reading “SCCCC Chairman John Jaros Presents Citizen of the Year Award to Leon Spencer”
Matthew G. Hauber joined Riley Riper Hollin & Colagreco in March. Named a 2016 “Pennsylvania Rising Star” by Super Lawyers, Matt concentrates his practice on a broad range of real estate and business law matters. Continue reading “Matthew Hauber Joins Riley Riper Hollin & Colagreco Team”