Background Overlay

Blog

Trump Administration Tax Reform: Specific Proposals

Personal and pivotal perspectives on timely topics, written by our professionals.

The current tax proposals stand to affect individuals in a variety of different ways including individual tax rates, deductions you can take on your income taxes, and the Alternative Minimum Tax (AMT).

Individual Tax Rates

One of the most significant potential impacts could be seen in the area of individual tax rates.  Trump’s proposal recommends collapsing the seven tax bracket system now in place into three broader brackets, as follows:

Conversely, the GOP blueprint proposed a tiered structure for tax rates on savings and investment income (which includes interest income) leading to basic rates of 6%, 12.5%, and 16.5%, depending on tax bracket. While Trump makes no mention of touching capital gains tax rates which currently stand at 20%, Trump’s proposals continue to support a repeal of the 3.8% net investment income tax  as well as an Affordable Care Act repeal in both chambers of Congress. 

Deductions

The Trump plan would double the standard deduction.  On the campaign trail, Trump’s plan would have implemented a cap on itemized deductions at $100,000 for single filers ($200,000 for joint filers) in exchange for this. Personal exemptions would be eliminated as well as the head of household filing status. 

Trump’s one page proposal would ‘protect home ownership and charitable donation itemized deductions’.  Similarly, the GOP blueprint would eliminate all itemized deductions except the mortgage interest and charitable donations. 

When it comes to real estate taxes, the most significant proposal comes in the form of impacts on capital expenditures and depreciation. Secretary of the Treasury Mnuchin has indicated the Administration does not support slowing depreciation and that, in fact, they’re looking at a “variety of ways” to increase depreciation. Campaign talk mentioned an election for immediate expensing in exchange for losing deductions for corporate interest expense. The GOP proposal would allow immediate expensing of business investment and limit interest expense to the extent of interest income (which would be carried forward). 

AMT

Under current law, itemized deductions for taxes are disallowed for AMT (for both state & local taxes and real estate taxes).  Many taxpayers in New York, New Jersey, and Connecticut feel the cost of AMT because of the high cost of taxes in these areas. 

Both Trump and Republicans in Congress propose repealing AMT. 

If itemized deductions for state & local income taxes become disallowed for regular tax purposes, this might alleviate the problem of AMT for many New York, New Jersey, and Connecticut taxpayers.  Treatment of real estate taxes remains unclear, however.   

It’s important to note that an AMT repeal with the disallowance of itemized deductions for taxes might be a wash. If legislation proceeds in the manner that’s currently being discussed, the timing of any state & local estimated taxes will be an important planning point as December 31st approaches.  Of course, it’s always a good idea to consult with your tax advisor to prepare a good tax projection prior to making any estimated tax payments.  

If you have any questions on how this may impact you or your business, please contact Thomas Edgar, CPA at tedgar@untracht.com

 

“The objective of this blog post is solely to summarize certain concepts and ideas that a person or entity may wish to consider with respect to selected accounting, tax and other matters. This information should not be considered advice of any kind.  Readers should always consult their own advisors. The information may not be relied upon by any party or used for any purpose. 
The information contains views, assumptions, facts, and information from sources that are believed to be true. The information is highly summarized and will not contain a full explanation of all matters and considerations surrounding a given topic. Untracht Early LLC has no obligation (express or implied) to update any of the information contained herein, nor will it update any of the information for subsequent changes or modifications to the law, accounting or auditing pronouncements, professional standards, regulations, or judicial and/or administrative interpretations thereof (if any). Untracht Early LLC accepts no responsibility whatsoever for indemnification or liability in respect to this document or for the information it contains. 
No summary of tax matters is complete without considering the Internal Revenue Code, the relevant Treasury Regulations, and any other guidance issued by the US Department of Treasury, the IRS, and applicable state, local, or other tax authorities. No summary of accounting and audit matters is complete without considering GAAP and/or other accounting and auditing standards, guidance, and interpretations issued by the Financial Accounting Standards Board, International Accounting Standards Board, AICPA (including the Auditing Standards Board), SEC, PCAOB or other professional and regulatory bodies. Please consult your own advisor(s).” 

PLEASE READ THESE TERMS AND CONDITIONS OF USE CAREFULLY. THIS IS A LEGAL CONTRACT.

Acceptance of Terms of Use

The Untracht Early LLC (UE) client portal is offered to you on the condition of your acceptance of the terms, conditions and notices contained herein. By using the portal you agree to these terms and conditions. If you are not a client or authorized employee of UE, any use by you of the portal is prohibited.

Description of Service

The portal provides UE’s clients with access to information displayed on the portal for inquiries and deliveries of documents and communications for their account only. The information, documents and communications on the portal are provided as a convenient resource to clients, their attorneys, agents and other designated representatives (collectively, “Agents”) and may be used for informational purposes only for their account. To the extent you wish to authorize any Agents to access your account, you must sign and return the form of Authorization set forth below.

User Password and Security

Using the portal and its related services requires the use of a password and a user name. The confidentiality of your password and account is your responsibility. Any activities that occur under your account either by you or your Agents are your responsibility. You agree to notify us immediately of any unauthorized use of your account or any other breach of security. It is prohibited to use anyone else’s account without the express permission of that account holder.

Accuracy of Content and Liability Disclaimer

UE will strive to use reasonable efforts to include accurate and updated information on the portal; HOWEVER, YOU UNDERSTAND AND AGREE THAT UE IS UNDER NO OBLIGATION TO DO SO AND NEITHER UE NOR ITS SUPPLIERS, AGENTS OR REPRESENTATIVES MAKE ANY REPRESENTATION OR WARRANTY ABOUT THE SUSTAINABILITY, RELIABILITY, AVAILABILITY, TIMELINESS, AND ACCURACY OF THE INFORMATION, SOFTWARE, DOCUMENTS AND COMMUNICATIONS CONTAINED ON THE PORTAL FOR ANY PURPOSE TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW. ALL SUCH INFORMATION, SOFTWARE, DOCUMENTS AND COMMUNICATIONS ARE PROVIDED “AS IS” WITHOUT WARRANTY OR CONDITION OF ANY KIND. UE, AND ITS SUPPLIERS, AGENTS AND REPRESENTATIVES HEREBY DISCLAIM ALL WARRANTIES AND CONDITIONS WITH REGARD TO SUCH INFORMATION, SOFTWARE, DOCUMENTS AND COMMUNICATIONS, INCLUDING WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OR CONDITIONS OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NON-INFRINGEMENT.

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT SHALL UE, OR ITS SUPPLIERS, AGENTS OR REPRESENTATIVES BE LIABILE FOR ANY DIRECT, INDIRECT, PUNITIVE, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OR ANY OTHER DAMAGES WHATSOEVER, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOSS OF USE, DATA OR PROFITS, ARISING OUT OF OR IN ANY WAY CONNECTED WITH YOUR OR YOUR AGENTS’ USE OR THE PERFORMANCE OF THE PORTAL, WITH THE DELAY OR INABILITY TO USE THE PORTAL OR RELATED SERVICES, WHETHER BASED IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, EVEN IF UE OR ITS SUPPLIERS, AGENTS AND REPRESENTATIVES HAVE BEEN ADVISED OF THE POSSIBILITY OF DAMAGES. CERTAIN STATES DO NOT PERMIT TYPES OF THESE LIMITATIONS, SO THE ABOVE LIMITATIONS MAY NOT APPLY TO YOU. IF YOU ARE DISSATISFIED WITH ANY PORTION OF THE PORTAL INFORMATION, DOCUMENTS OR COMMUNICATIONS ON THE PORTAL, OR WITH ANY OF THESE TERMS AND CONDITIONS OF USE, YOUR SOLE AND EXCLUSIVE REMEDY IS TO CEASE USING THE PORTAL AND THE INFORMATION, DOCUMENTS OR COMMUNICATIONS YOU OBTAINED FROM THE PORTAL.

Icons, Logos and Other Proprietary Material

The trademarks, logos, and service marks (collectively the “Trademarks”) displayed on the portal are registered and common law trademarks of this firm. Nothing contained on the portal should be construed as granting, by implication, or otherwise, any license or right to use any of the Trademarks displayed on the portal without the written permission of this firm. Your use of any of the Trademarks displayed on the portal or displayed on any content on the portal is strictly prohibited. You should assume that everything you see or read on the portal is copyrighted and is a trade secret and may not be used except as provided in these terms and conditions of use or in the text on the portal without the written permission of this firm or its suppliers.

Changes to Terms and Conditions of Use

UE may at any time modify the terms, conditions and notices under which the portal is offered by updating this posting. You are bound to any such modifications and should therefore periodically visit this page to review the then-current terms and conditions to which you are bound.

Confidentiality, Information Protection, and Protection Data

Notwithstanding any existing legal or contractual obligations regarding confidentiality between you and UE, you undertake to treat all knowledge relating to business secrets, which come into your possession, as confidential. You shall assure that any protected data, which comes into your possession through the use of the portal, is not transmitted to any unauthorized person. In partial consideration of the opportunity to access the resources of the portal concerning your account, you agree to maintain the strict confidentiality of access of the portal and its data to you and your authorized Agents and to indemnify and hold harmless UE and its officers, shareholders and employees and their heirs, successors and assigns from and against any and all claims, actions, demands, losses, damages, judgments, costs and expenses, including without limitation, reasonable attorneys’ fees and liabilities of every kind which may arise from your or your employees’ or agents’ use of the portal or because of violation of these terms and conditions of use.

No Unlawful or Prohibited Use

You are prohibited from using the portal to damage, disable, or overburden UE’s servers or network or impair the portal or interfere with any other party’s use of the portal. Hacking, password mining or any other means to gain unauthorized access to the portal, portal accounts, computers or network is prohibited. Posting or transmitting any unlawful, threatening, libelous, defamatory, obscene, scandalous, inflammatory, pornographic, or profane material or any material that could constitute or encourage conduct that would be considered a criminal offense, give rise to a civil liability, or otherwise violate any law is also prohibited. UE will fully cooperate with any law enforcement authorities or court order requesting or directing this firm to disclose the identity of anyone posting any such information and materials. This firm is an equal opportunity employer and values the diversity of its people.

RELEASE AND INDEMNITY. IN AGREEING TO USE, AND BY USING, THE UNTRACHT EARLY PORTAL, YOU ALSO AGREE TO, AND HEREBY DO, RELEASE AND DISCHARGE UNTRACHT EARLY FROM ANY AND ALL CLAIMS OF EVERY NATURE AND DESCRIPTION ARISING OUT OF OR RELATING TO THE POSTING OF INFORMATION ON THE PORTAL, YOUR OR YOUR AGENTS’ USE OF THE PORTAL, AND/OR ANY BREACH OF SECURITY INVOLVING THE PORTAL. YOU HEREBY AGREE TO INDEMNIFY AND DEFEND UNTRACHT EARLY, ITS AGENTS, REPRESENTATIVES AND EMPLOYEES AGAINST ANY CLAIMS, DEMANDS, LAWSUITS AND OTHER PROCEEDINGS MADE ABOUT YOU, MADE BY THOSE IN PRIVITY WITH YOU OR MADE BY THOSE ACTING IN CONCERT WITH YOU, IN ANY WAY, WITH REFERENCE TO YOU OR YOUR INFORMATION OR BY ANY THIRD PARTIES ON YOUR BEHALF (INCLUDING AGENTS) RELATING IN ANY WAY TO THE UNTRACHT EARLY PORTAL.