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Congress has announced its intention to make the largest change in the U.S. tax code in almost 30 years. The proposed "Tax Reform Act of 2014" will have a huge impact on all taxpayers, both individual and corporate. While nobody knows what the final language of the Tax Act of 2014 will be, it is vital that you know as much about the proposed changes as possible. While we don't expect Congress to pass this legislation this year, it will benefit you to be in-the-know. View slides from Gray, Gray & Gray's recent "Preview of the 'Tax Reform Act of 2014'" webinar to learn more about the proposed legislation.
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Presented By:
Michael D. Koppel,
CPA, MBA, PFS, CITP
Today’s Presenter
Michael D. Koppel, CPA, MBA, PFS, CITP [email protected] [email protected]
P: (781)407-0300 | D: (781)407-3254 C: (617)775-2129
Today’s Goal
Not to be political
Not favor any specific position
Make people aware so they can
make informed decisions during the
upcoming discussion
Make their desires known
Tax Reform Act of 2014
UNLESS RELEVANT
Tax Reform Act of 2014
UNLESS YOU ASK
Tax Reform Act of 2014
SOME HISTORY
TAX REFORM ACT OF 1986 RULE OF UNINTENDED CONSEQUENCES!
Tax Reform Act of 2014
CAMP’S GOAL:
Simplicity and Fairness
Tax Reform Act of 2014
Only 2 Individual Rates
SINGLE MARRIED
JOINT
PRESENT
LAW
PROPOSED
<$9,200 <$18,400 10% 10%
$9,201-$37,400 $18,401 15% 10%
$37,401-$90,600 $74,801-$151,100 25% 25%
$90,601-$189,000 $151,000-$230,000 28% 25%
$189,001-$410,950 $230,101-$410,950 33% 25%
<$412,650 >$464,200 39.8% 25%
Tax Reform Act of 2014
10% Surtax MAGI Over
$400,000 / $450,000
Marriage Penalty!
Tax Reform Act of 2014
But wait, there is more!
Tax Reform Act of 2014
Eliminates deduction state & local taxes
Increase in standard deduction with higher phase-out
Reduce cap for mortgage deduction to $500,000 (phased-in)
New exemption of dividend and capital gain
Investment interest expense reduced by tax-exempt interest
Increased restriction & phase-out of residence gain exclusion
More:
Tax Reform Act of 2014
Limitation on charitable donation (excess of 2% of AGI)
Percentage deduction reduced
Repeal of most individual credits
4 higher education provisions rolled in American Opportunity Credit
Expands child care credit
No personal exemptions
NII surtax remains
Even More:
Tax Reform Act of 2014
Reduces by half available 401(k)
Other half can be made a Roth type account
Employers with more than 100 employees must offer Roth accounts
Remove income limits on Roth IRAs
No new contributions to regular or nondeductible IRAs
Repeal exceptions to 10% early
withdrawal penalty
Retirement
Tax Reform Act of 2014
AMT Repealed for All Provisions for unused credits
WHY?
Tax Reform Act of 2014
Repeal of MACRs
Usually longer lives (ADS)
Straight line
But can elect additional depreciation for inflation
No bonus depreciation
Repeal special rules for pollution control facilities
90% limitation on NOLs
Special 5 year life for R&D expenses
Advertising expense 50% deduction remainder 10 year life
Does not apply to first million but phase-out
§179 $250,000 phase-out starting at $800,000
Business Provisions
Tax Reform Act of 2014
Goodwill and most other intangibles now 20 year
amortization
End of LIFO/lower of cost or market
Like-kind exchanges gone or minimized
New limitations on entertainment etc.
Repeal of “small business” tax exemption
New rules for gain on contribution of assets for capital
New rules or repeal of most credits
Reduction of installment sales interest to $150,000
Repeal of production deduction (sort of)
Business Provisions
Tax Reform Act of 2014
Limitation on the Cash Method
All entities with revenue of $10 million or
more Except
Farms
Sole proprietors
Tax Reform Act of 2014
Self-Employment Tax
History - bifurcation – sense of the senate
70% subject to S/E tax ($15.3 billion over 10
years)
Repeal of exception for certain students
($13 billion over 10 years)
Tax Reform Act of 2014
Carried Interest
Tax Reform Act of 2014
Big Bank Tax
Tax Reform Act of 2014
New limitation on completed-contract method
New rules on derivatives
Sale of securities must use LIFO
Income from private activity bonds taxable
Simplification of certain S Corp rules
Repeal partnership guaranteed payment rules
New REIT rules
New deferred compensation rules
New safe harbor for worker classification
Other “Stuff”:
Tax Reform Act of 2014
New restrictions and changes to foreign income
New UBTI rules for not for profits
Changes to cruise ship, and employees taxation
Taxation of excess compensation of officers of tax-exempt organizations
Excise tax on certain investment income of private colleges
Taxations of “professional football leagues”
Taxpayer Bill of Rights
Other “Stuff”:
Tax Reform Act of 2014
Estate & Gift
Questions?
Michael D. Koppel, CPA, MBA, PFS, CITP [email protected] [email protected]
P: (781)407-0300 | D: (781)407-3254 C: (617)775-2129
Contact Us
Disclaimer
The content of this webinar is intended for educational purposes only.
This webinar provides a brief summary based on our understanding and interpretation of current law. All
tax references are to federal tax law only, unless otherwise stated.
The information contained in this webinar is general in nature and is based on authorities that are subject
to change. It is not, and should not be construed as accounting, legal or tax advice or opinion provided
by Gray, Gray & Gray, LLP. The material presented may not be applicable to, or suitable for, specific
circumstances or needs, and may require consideration of non-tax factors and tax factors not described
herein. Contact Gray, Gray & Gray or another tax professional prior to taking any action based upon this
information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis the
information contained herein; Gray, Gray & Gray assumes no obligation to inform the reader/webinar
attendee of any such changes.
The material presented in this webinar is not intended to, and cannot be used to, avoid IRS penalties. This
material supports the marketing and promotion of accounting services. Seek advice based on your
particular circumstances from independent tax, legal accounting, insurance, investment and financial
advisors.
Michael D. Koppel, CPA, PFS is a Certified Public Accountant in Massachusetts and serves as Tax Advisor
at Gray, Gray & Gray, LLP.
