Tax Update: Business Meals and Entertainment – How to Maximize Tax Deductions
Many businesses consider the occasional wining and dining of customers and clients just to stay in touch with them to be a necessary cost of doing business. The same goes for taking business associates or even employees out to lunch once in a while after an especially tough assignment has been completed successfully. It’s easy to think of these entertainment costs as deductible business expenses, but they may not be. As a general rule, meals and entertainment are deductible as a business expense only if … Click Here for Full Video/Article (Members Only)
Tax Update: Debate Over Health Care and Taxes Moves to Senate
The future of the Affordable Care Act and its associated taxes has moved to the Senate following passage of the American Health Care Act (AHCA) in the House in April. Traditionally, legislation moves more slowly in the Senate than in the House, which means that any ACA repeal and replacement bill may be weeks if not months away.
Note. At the time this article was prepared, few details have emerged about discussions in the Senate on the ACA’s taxes. Some senators have predicted that the Senate will write its own ACA repeal and replacement bill. A Congressional Budget Office (CBO) report, issued in late May, scored the House-passed AHCA as eventually causing 23 million… Click Here for Full Video/Article (Members Only)
Trump’s Fiscal Year 2018 Budget Outlines Tax Reform Proposals
Since taking office in January, President Trump has called for comprehensive tax reform. The President’s recently released fiscal year (FY) 2018 outlines some of his key tax reform principles. At the same time, White House officials said that more tax reform details will be released in coming weeks. These details are expected to describe rate cuts for individuals and businesses, new incentives for child and elder care, elimination of certain deductions and credits, and more.
Note. The President’s budget is a blueprint for Congressional action. “This is the message from the President to the Congress and says, look, here are my priorities in terms of where I want to spend more; here’s what I think should be spent; here’s where the big-ticket items are,” White House Budget Director Mick Mulvaney told reporters in Washington, D.C. at a news conference unveiling the FY 2018 budget proposals.
Major tax changes expected under Trump Administration
One month after the presidential election, taxpayers are learning more about President-elect Donald Trump’s tax proposals for his administration. Although exact details, including legislative language, are likely months away, taxpayers have a snapshot of the president-elect’s tax proposals for individuals and businesses.
Note. At the time this article was prepared, the primary descriptions of President-elect Trump’s tax proposals are on his campaign and transition websites. The materials on these websites are not the same as legislation, which would amend the Tax Code. Rather, they discuss the President-elect’s tax proposals in very general and broad language.
The speculation is finally over. Former GOP presidential candidate and retired neurosurgeon Ben Carson will soon make his final announcement accepting the role of HUD secretary, sources close to the situation confirm. The build up from the week brought much speculation as rumors swirled and Carson hinted at an upcoming announcement.
Congress Returns for Year-End Tax Legislation Push
Year-end 2016 is expected to bring a rush of tax-related legislation in Congress. Lawmakers will be up against a December 31 deadline to renew some expiring tax incentives and possibly pass new tax breaks for individuals and businesses. The year may end with what is often called a “Christmas Tree bill,” a bill that includes a variety of tax and other provisions.
Note: At the time this article was posted, the results of the November 8 presidential election was not yet known. That outcome will shape tax legislation in 2017 and beyond.
Tax breaks for individuals
In December 2015, many popular but temporary tax incentives for individuals were scheduled to expire at year-end. Congress renewed or made permanent most of these tax breaks in the Protecting Americans from Tax Hikes Act (PATH Act). However, some incentives were not included in the PATH Act and these are up for renewal, or possibly being made permanent, this December. They include the Code Sec. 25C residential energy credit (for energy-efficient improvements to homes) and the popular above-the-line deduction for higher education tuition and fees.
Tax breaks for businesses
The PATH Act also extended, and in some cases made permanent, many tax incentives for businesses. Some incentives, however, were not included in the PATH Act and are expected to come up for renewal this December. They include targeted incentives for film and television productions, Native American employment, the mining industry, railroads, and motorsports complexes. Along with these, some special tax breaks for alternative fuels are scheduled to expire at year-end.
Along with the incentives already described, some stand-alone tax bills are expected to come to votes in Congress before year-end. The bills, if passed, impact individuals, small businesses, farmers, and tax administration. They include:
The Support Small Business R&D Bill, which would expand knowledge resources available to startups and small businesses in connection with their using the research and development (R&D) tax credit.
The Restraining Excessive Seizure of Property through Exploitation of Civil Asset Forfeiture Tools (RESPECT) Bill, which would limit the IRS’s civil asset forfeiture authority (a companion bill has already passed the House).
The Middle-Income Housing Tax Credit (MIHTC) Bill of 2016, which would provide tax credits to encourage development of affordable housing
The Retirement Enhancement and Savings Bill of 2016, which expands tax incentives for small employers to create retirement savings plans and repeals the maximum age for contributions to traditional IRAs.
The Louisiana Flood and Storm Victims Devastation Act, which provides emergency tax relief for persons affected by severe storms and flooding in Louisiana.
The Farm Risk Abatement and Mitigation Election (FRAME) Act, which authorizes agricultural producers to establish and contribute to tax-exempt farm risk management accounts.
Any or all of these bills, and others, could be part of a year-end tax package. Our office will keep you posted of developments.
J. Michael Grinnan, CPA.CITP Certified Public Accountant
9900 Corporate Campus Drive, Suite 3000
Louisville, KY 40223
“Bureaucratic red tape and Washington mandates are not the answer”
November 10, 2016
Now that the dust is starting to settle from the election, a clearer picture is beginning to emerge of what types of actions President-elect Donald Trump will pursue once the “-elect” is removed from his title.
Chief among those planned actions appears to a plan to “dismantle” the Dodd-Frank Wall Street Reform Act.
Trump’s plans for the first days of his term as president are being revealed on a website launched by his transition team.
Under a section titled “Make America Great Again,” the website lists the three main tenets of Trump’s plan: Making America Secure Again; Getting America Back To Work Again; and Government for the People Again.
Each of those main sections has several subsections, and those in the financial services industry should pay close attention to the “Getting America Back To Work Again,” as it contains much of Trump’s plan for the economy.
“Financial markets are vital to the American economy. Capital markets bring investors together with creators to fund new ideas and fuel economic growth,” the website reads under a subsection entitled “Financial Services.”
“Banks and other lenders provide funding to small businesses and mortgage borrowers to help fund the American Dream,” the website continues. “Federal policy should focus on free enterprise, while protecting consumers by policing markets for force and fraud. Both Wall Street and Washington should be held accountable.”
The Trump website then goes on to discuss the impact of the Dodd-Frank Act, and how the Trump administration will work to replace it.
The website calls Dodd-Frank a “sprawling and complex piece of legislation that has unleashed hundreds of new rules and several new bureaucratic agencies,” including the Consumer Financial Protection Bureau.
“The proponents of Dodd-Frank promised that it would lift our economy. Yet now, six years later, the American people remain stuck in the slowest, weakest, most tepid recovery since the Great Depression,” the website states.
“Paychecks have been stagnant. Savings are being depleted, millions are unemployed or underemployed, and millions more have dropped out of the workforce altogether,” the website continues. “Economic growth remains below 2%, about half the historic average. The big banks got bigger while community financial institutions have disappeared at a rate of one per day, and taxpayers remain on the hook for bailing out financial firms deemed ‘too big to fail.’”
In the words of the Trump transition team, Dodd-Frank and the economy it fostered “does not work” for America.
“Bureaucratic red tape and Washington mandates are not the answer,” the website states. “The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.”
One of the main issues that many have with Dodd-Frank is the amount of regulations that the law place on the financial services industry.
Trump’s website doesn’t provide any additional details on how President Trump will go about dismantling Dodd-Frank, but the website does also contain a separate section entitled “Regulatory Reform,” which is called a “cornerstone” of the Trump Administration.
According to the website, Trump’s regulatory reform effort, which he spoke about often on the campaign trail, includes: “a temporary moratorium on all new regulation, canceling overarching executive orders and a thorough review to identify and eliminate unnecessary regulations that kill jobs and bloat government.”
The Trump Administration is “committed to regulatory reform that will produce sensible regulations that allow America to be great,” the website states.
As HousingWire previously reported, there’s already a Republican-led effort underway in Congress to repeal and replace Dodd-Frank and many of its regulations.
Earlier this year, House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, introduced a bill in the House that would replace Dodd-Frank with a “pro-growth, pro-consumer” alternative that would bring significant reforms to the CFPB, and much more.
The bill, called the Financial CHOICE act, passed out of the House Financial Services Committee in September.
The bill would “end taxpayer-funded bailouts of large financial institutions; relieve banks that elect to be strongly capitalized from ‘growth-strangling regulation’ that slows the economy and harms consumers; and impose tougher penalties on those who commit fraud as well as greater accountability on Washington regulators.”
Again, it’s unknown how Trump will accomplish the dismantling of Dodd-Frank, but Christopher Whalen, the senior managing director of Kroll Bond Rating Agency, is already predicting that pursuing the Financial CHOICE Act, or some version of it could be one of Trump’s first moves as president.
“Changing the narrative regarding Dodd-Frank and related regulations is not a simple task,” Whalen wrote in a post-election note. “That said, addressing Dodd-Frank and related issues is a lot simpler than either tax reform or fixing the (Affordable Care Act.)”
Whalen says that KBRA’s “decidedly speculative bet” is that Trump will back a modified version of the Financial CHOICE Act that would be altered to make it more “palatable” to the Senate.
Despite Democratic opposition to any proposed changes to Dodd-Frank, Whalen writes that changes to Dodd-Frank could be much more easily accomplished that changes to the tax code, or repealing Obamacare.
“We note that Rep. Hensarling is very close to Vice President-elect and Indiana Governor Mike Pence from the latter’s days in Congress, and that Hensarling even travelled with the campaign,” Whalen writes. “KBRA notes that there are a number of other issues that may catch the attention of the new President next year, but for our money passage of an amended version of the CHOICE Act has the highest probability of success in 2017. Needless to say, the financial services industry would be very supportive.”
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