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Tes' Take: Tax Cuts and Jobs Act (H.R.1)

Tes Macaraya is a partner and head of tax at Martini Iosue & Akpovi

After months of speculation over what would be included in Trump-era tax reform, legislative language is finally here, with the release of the Tax Cuts and Jobs Act (H.R. 1). The 429-page document would reshuffle the existing scheme of tax incentives and burdens that have become entrenched facets of financial decision-making in the United States, at both a business and personal level.

There are some key issues that would have a significant effect on businesses such as limitation of the interest expense deduction for businesses with average gross receipts of over 25M, increase in section 179 deduction, limit deferral of gain on like-kind exchanges, repeal of the deduction allowed for domestic production activities, and disallow certain entertainment expenses. Although the proposed legislation lowers the corporate tax rate to 20% and creates a maximum rate of 25% on pass through entities, the net tax benefit to businesses might not be as significant as originally thought. This document provides more detail.

With Republican leadership hoping to enact legislation before the end of the year, stakeholders will have to act quickly to digest the bill and determine how their interests would be affected.

If you would like to discuss how the new legislation would affect your circumstances, please call Tes at (818) 789 1179.

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