Tax Cuts and Jobs Act – Many changes effective January 1, 2018

Giuseppe BrusaPartner, G.C. Consultants, Inc.

As you may have heard, on December 22, 2017 the Tax Cuts and Jobs Act was signed by President Trump, a major overhaul of the federal income tax system in more than 30 years especially for corporations. 

Many changes are effective January 1, 2018, providing corporations little time for tax planning. Some key changes effecting many Corporation, including U.S. subsidiaries of foreign entities include:

  • Corporations will now be taxed at a flat rate of 21% for federal income tax, a considerable reduction from the previous tax brackets with the highest rates at 35%.
  • Corporate alternative minimum tax (AMT) has been repealed. 
  • Bonus Depreciation will allow taxpayers to immediately expense the entire cost of certain depreciable assets acquired and placed in service after September 27, 2017 and before January 1, 2023. The current law only allows a 50% deduction for qualified assets in the year the assets are placed in service. 
  • Section 179 expensing for qualified property has been increased to allow a deduction up to $1 million.
  • Net operating loss (NOL) deduction will be limited to 80% of taxable income for losses arising in tax years beginning after December 31, 2017. Additionally, taxpayers can no longer carryback losses, but can carryforward NOL.
  • For some tax payers Interest expense may be limited to 30% of adjusted taxable income.

These are just highlights of the changes and impact of the Tax Cuts and Jobs Act. There is much more to discuss and we can help with the immediate and long-term impact of the Tax Cuts and Jobs Act on your situation. Please contact us at 212-310-9311 or tax@gcconsultants.com for guidance on specific provisions that directly affects you.