We’ve compiled a list of the most frequently asked questions concerning the new corporate tax laws under the Tax Cuts and Jobs Act (TCJA).
Q: What is the new Corporate tax rate?
A: The new corporate tax rate is 21% beginning in 2018.
Q: What deduction can I get for my pass-through entity?
A: The bill allows for a deduction of 20% of the pass-through income from sole proprietorships, partnerships, and S-corporations. There are several limitations to this, but the details are very complex and must be analyzed on a case by case basis.
Q: Were there any changes that apply to my 2017 tax return?
A: Yes, the current 50% allowance for expensing of property (Bonus Depreciation) for the year placed in service is increased to 100% for qualified property placed in service after September 27, 2017. The bill includes removal of the requirement that the original use of qualified property must commence with the taxpayer (used property is now eligible). “Qualified property” generally means property with a useful life of 20 years or less.
Q: Has corporate AMT tax been repealed?
A: Yes! There is no more corporate AMT tax.
Another point of note: Like Kind Exchange (1031) no longer applies to personal property – The provision providing for nonrecognition of gain in the case of like-kind exchanges has been modified by limiting its application to real property that is not held primarily for sale.
If there are any questions that haven’t been answered, please contact your HAC accountant.