Options

The 2017 TCJA created a new 20% deduction for qualified business income (QBI). This QBI deduction for pass-through entities was set to expire after 2025, along with many of the 2017 provisions. The 2025 OBBB made the 20% 199A deduction permanent. However, the 20% QBI...

The final draft tax legislation modifies the existing bonus depreciation rules which, as of today, only allow businesses a 40% depreciation deduction in the first year that qualifying assets are acquired. Under the “one big beautiful bill”, or OBBB, bonus depreciation in year-one is again...

By removing depreciation, amortization and depletion deductions from the calculation of adjusted taxable income (ATI), the OBBB essentially increases the amount that businesses will be entitled to deduct with respect to business interest expenses. Pursuant to the 2017 tax reforms, taxpayers are entitled to deduct...

by Prof. Robert Bloink and Prof. William H. Byrnes<br /> <br /> The Trump administration and GOP-controlled Congress have managed to push the so-called "One Big Beautiful Bill" Act, or "OBBBA" past the finish line by the administration’s self-imposed July 4th deadline. The sweeping legislation contains major changes—both for...

The final draft tax legislation modifies the existing bonus depreciation rules which, as of today, only allow businesses a 40% depreciation deduction in the first year that qualifying assets are acquired.  Under the “one big beautiful bill,” or OBBB, bonus depreciation in year-one is again increased to 100%--and made permanent for qualified property that is acquired and placed into service on or after January 19, 2025.  Yet another elective 100% depreciation deduction is allowed for certain “qualified production property,” or (QPP).  This elective additional deduction is temporary and allowed only through 2030. “QPP” is defined to include newly constructed (and some existing) non-residential real estate that is used for manufacturing, production, or refining of defined tangible personal property within in the U.S.<br /> <br /> We asked two professors and authors of ALM’s <em>Tax Facts </em>with opposing political viewpoints to share their opinions about the Trump tax legislation making 100% bonus depreciation permanent.<br /> <br /> Below is a summary of the debate that ensued between the two professors.<br /> <br /> <strong>Their Votes:</strong><br /> <br /> <img class="alignnone size-medium wp-image-62920" src="https://cms-taxfacts.thinkadvisor.com/wp-content/uploads/2024/07/ByrnesThumbsUp-300x105.png" alt="" width="300" height="105" /><br /> <br /> <img class="alignnone size-medium wp-image-62922" src="https://cms-taxfacts.thinkadvisor.com/wp-content/uploads/2024/07/BloinkThumbsDown-300x105.png" alt="" width="300" height="105" /><br /> <br /> <strong>Their Reasons:</strong><br /> <br /> <strong>Byrnes:</strong> For years, we've been in a near-constant state of limbo over the application of the bonus depreciation rules, which tend to flip flop back and forth as administrations change.  By making the 100% first-year bonus depreciation permanent, Congress has now given business owners the certainty that they need and deserve.<br /> <br /> <strong>Bloink:</strong> Yes, we should be encouraging certainty to further economic growth and help our small business owners.  The tax bill’s final provision on bonus depreciation, as enacted, is a giveaway to the largest corporations in this country--yet another benefit for the wealthy.  This is the last thing this dramatic piece of legislation needed.<br /> <br /> ________________________________________<br /> <br /> <strong>Byrnes:</strong> The one big beautiful has given us the level of certainty now serves to ensure that businesses will continue to invest in growing their businesses and, in turn, supporting the strong economic growth that Americans voted for when they elected Trump to another term in office.<br /> <br /> <strong>Bloink:</strong> The bonus depreciation rules could have been modified to ensure they support the small business owners that they're meant to support.  Income limitations would serve to provide support and certainty for small businesses while limiting the benefit for the largest corporations that have already received disproportionate benefits under this new tax law--not to mention the 2017 tax reforms.<br /> <br /> ________________________________________<br /> <br /> <strong>Byrnes:</strong> Trump campaigned on certain promises, and now his administration is following through on those promises.  Our economy has been moving through a period of stagnation in the wake of Biden’s inflation-driven economy.  With this new big, beautiful bill, we’ll be well positioned to begin moving positively toward the strong economy that Americans have been missing for the last four years.  When businesses invest in growing their own enterprises, the entire economy prospers.<br /> <br /> <strong>Bloink:</strong> We all know how the word “permanent” functions under the tax code.  Nothing in the Internal Revenue Code is ever truly permanent.  Maybe this provision does create a sense of security in the permanence of this provision—but that could very well be a false sense of security.  The law could have been drafted to ensure we weren’t providing yet another method for the very wealthiest corporations and Americans to avoid paying their fair share in taxes.

As a reminder on the importance of reporting transactions involving virtual currency and digital assets, a taxpayer recently pled guilty in the U.S. District Court for the Middle District of Pennsylvania (in U.S. v. Waylon Wilcox) to criminal charges for failing to report and pay taxes...