The Tax Cuts and Jobs Act (TCJA), passed in December of 2017, was aimed at dissuading U.S. companies from moving profits offshore. However, it may make shifting earnings to tax havens more beneficial for some companies.
Before the TCJA, companies that offloaded profits linked to sales, research or production were taxed at a 35% rate when the profits were brought to the United States. The TCJA moved the U.S. to a “territorial” system, which was meant to reduce or eliminate the incentive for companies to invert to avoid U.S. taxes on foreign income. (more…)
Even though the Tax Cuts and Jobs Act (TCJA) doesn’t include many revisions to estate tax laws, it does provide one major enhancement. Under the TCJA, the unified gift and estate tax exemption of $5 million, which is indexed for inflation, is doubled to $10 million. The indexed figure for 2018 is $11.18 million ($22.36 million for married couples). This means that only the wealthiest families run a risk of federal estate tax liability (although state taxes may offer additional challenges). Given the substantially increased exemption amount, consider re-examining your lifetime gift-giving strategies. (more…)
On February 13, 2018, the Treasury Department and the Internal Revenue Service issued Rev. Proc. 2018-17, which provides modifications to the procedures for changing the accounting period of foreign corporations owned by U.S. shareholders that are subject to the transition tax under the Tax Cuts and Jobs Act. Rev. Proc. 2018-17 basically disallows the accounting period change if such change could result in the avoidance, reduction, or delay of the transition tax. (more…)
The Tax Cuts and Jobs Act (the Act), enacted on December 22, 2017, creates some interesting consequences when applying US GAAP principles for income tax accounting related to deferred taxes. FASB guidance requires that deferred income tax assets and liabilities be remeasured as a result of changes in tax laws or tax rates. As commonly known by now, the Act reduced the maximum tax rate for corporations to 21% from 35%. (more…)
After recent tax legislation, including the Tax Cuts and Jobs Act (TCJA), few tax shelters are left standing. One key exception is life insurance. If certain requirements are met, the buildup of value in a life insurance policy is exempt from current income tax, while proceeds payable upon death can avoid estate tax. (more…)
As everyone knows by now, the U.S. tax system was widely altered on December 22, 2017 by enactment of the Tax Cuts and Jobs Act (the Act). The date of enactment is highlighted here because that is the date that triggers financial statement implications. Oh…so close to year-end for most companies. This timing situation is complicated because: (more…)
By Wei Wei, Tax Senior
As you have been made aware from our series of webinars, e-mail updates and blog posts, President Trump signed the Tax Cuts and Jobs Act just in time for the new year and the Act includes new rules for the taxation of “qualified equity grants”. Internal Revenue Code Section 83(i) allows “eligible employees” to elect to defer taxation on the exercise of certain stock options or the settlement of restricted stock units for up to 5 years. Employees must make the election no later than 30 days after the employee’s rights in “qualified stock” are transferrable or vested. The election only defers income tax, the stock-based compensation received by the employee is still subject to employee and employer payroll taxes when vested. (more…)
By Julie Malekhedayat, CPA
ASL Family Wealth & Individual Tax Planning Group
The most comprehensive tax law change in decades, commonly known as the Tax Cuts and Jobs Act, was signed into law on December 22, 2017. Although the corporate tax cut provisions were a highly publicized aspect of the bill, the numerous and dramatic changes to individual income tax rules will change the landscape for most taxpayers, beginning with the 2018 tax year. For some, the estate tax changes will have a material impact as well. However, as widespread as these changes are, almost all are set to last only seven years, through 2025, unless Congress acts to extend or revamp the laws before then. (more…)
A loophole in the Tax Cuts and Jobs Act (TCJA) could allow multinational corporations like Apple to avoid paying billions of dollars in taxes on profits stashed overseas.
The TCJA imposes a transition tax on untaxed foreign earnings of foreign subsidiaries of U.S. companies by deeming those earnings to be repatriated. But the law contains a loophole that allows taxpayers to convert income that would otherwise be taxed at 15.5% (cash holdings) into income that is taxed at 8% (more illiquid investments).
And multinationals could have leeway to shift foreign earnings into the 8% tax bracket. (more…)