Proposed Tax Law Changes Could Impact Expansion Strategies – Part 3

December 13th, 2016

In part two of this three part blog series Charles Postal, a founding partner of Topline Valuation Group and Managing Partner of accounting firm Santos, Postal & Company, P.C., covered the impact of potentially repealing the alternative minimum tax (AMT), federal estate and gift tax and the Patient Protection and Affordable Care Act (ACA). Part three of this series address certain business tax proposals and what to expect for the remainder of 2016.

Business Tax Proposals

On the business front, President-elect Trump highlighted small businesses, the corporate tax rate, and some international proposals during his campaign, along with the simplification and reduction of taxes for small business as areas that, when fixed, would stimulate the economy. The following are the critical components of the President-elect’s business tax proposals:

  • For small businesses he proposed a doubling of the Code Sec. 179 small business expensing election from $500,000 to $1 million, as well as the immediate deduction of all new investments in a business – a move already endorsed by Congressional tax reform/simplification advocates.
  • The current corporate tax rate is 35 percent. President-elect Trump called for a reduction in the corporate tax rate to 15 percent, and proposed sharing that rate with owners of “pass through” entities (sole proprietorships, partnerships, S corporations, etc.) on profits that are put back into the business.
  • Multinational corporations would, based on campaign materials, receive a one-time reduced repatriation of foreign earnings tax rate of 15-20 percent (current rate is 35 percent) on foreign subsidiaries’ earnings being held offshore. The President-elect believes a lower tax rate would encourage these companies to repatriate a significant amount of these earnings, which would benefit the U.S. economy and government. Many more details about these corporate and international tax proposals are expected to be released over the coming months.

Year-End 2016

More immediately, the calendar is quickly turning to 2017. Congress will meet for a “lame duck” session and is expected to take up tax legislation. Exactly what tax legislation Congress will consider before year-end remains to be seen. Every lawmaker has his or her “key” legislation to advance before the end of the year, which includes:

  • Expiring tax extenders, energy extenders in particular.
  • Funding the federal government, including the IRS, through the end of fiscal 2017.
  • Enhancing individual retirement savings.
  • Providing assistance to citrus farmers, small businesses and more.

Some of these bills, if passed and signed into law, would impact year-end tax planning. The expiring extenders include the popular higher tuition and fees deduction, as well as some targeted business incentives. If these extenders are renewed, or made permanent, the Santos, Postal & Co., P.C. office can assist you in maximizing their potential value in year-end tax planning.

Another facet of year-end tax planning is looking ahead. President-elect Trump has proposed some significant changes to the tax code for individuals and businesses. If these proposals become law, especially any reduction in income tax rates, and are made retroactive to January 1, 2017, your tax planning definitely needs to be reviewed to maximize potential tax savings.

Working with Congress

When the 115th Congress convenes in January 2017, the GOP will be in control of both the House and Senate, which should allow President-elect Trump to move forward on his proposals more easily. It remains to be seen, however, what compromises will be necessary between Congress and the Trump Administration to find common ground. Indeed, compromise will be essential to on-board both GOP fiscal conservatives seeking revenue offsets to pay for tax reduction, and Senate Democrats holding filibuster rule to prevent passage of tax bills with fewer than 60 votes. Whether tax proposals can be packaged within a broader mandate for comprehensive “tax reform and simplification”, as opposed to considering tax proposals one tax bill at a time, remains to be seen.

If you would like to confidentially speak with a member of our team about how these campaign and income tax proposals could affect you and/or your business, send us an email at hq@kaulkin.com.

Comments are closed.

LATEST BLOGS

Options Abound for Sellers of Lower Middle Market Businesses

July 18, 2017

There is no shortage of buyers for a selling company in the lower end of the middle market. Sorting through all prospective buyer candidates to find the very best for your business is a challenge that any owner shouldnt take lightly.....

» see this post    » all posts


Changing with the Times: Cybersecurity in Collection

July 13, 2017

Collection agencies have a lot of valuable information that hackers are looking to get their hands on. Are you protected?....

» see this post    » all posts


Is Your Business Prepared for a Sale?

July 11, 2017

Preparing a business for a potential sale is not only a defensive move that an owner can take, but it is also prudent to business. Here are a few ways to make sure you're prepared.....

» see this post    » all posts


RECENT ANNOUNCEMENTS

Kaulkin Ginsberg Moves Its Market Intelligence Online

June 8, 2017

Kaulkin Ginsberg is changing the way busy owners, executives, and senior leaders access strategic market intelligence with the launch of KG Prime. KG Prime is a comprehensive and easy to use web-based service that provides users with economic, market segment, and other forms of strategic research.....

» see more




AXIAL FORUM - Publishes "Succession Planning - A Critical Missing Element in Many Family-Owned Businesses"

June 7, 2017

AXIAL FORUM, a web-based strategic mediator for the M&A industry, recently published an article succession planning by Topline Valuation Group. This article was co-authored by members of the Topline Valuation Group and Kaulkin Ginsberg team....

» see more




ACA of Texas Publishes "Three Critical Healthcare Industry Trends for Outsourced Business Services" in its Winter 2017 Magazine

March 16, 2017

The ACA of Texas Publishes "Three Critical Healthcare Industry Trends for Outsourced Business Services" by Kaulkin Ginsberg in its Winter 2017 Magazine. Kaulkin Ginsberg details its belief that the growth in patient lending and financing programs, clinical integration networks, and physician quality reporting systems for the Centers for Medicare and Medicaid Services (CMS) could have profound effects on companies focused on servicing healthcare providers in 2017 and beyond.....

» see more