Nfts

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...

The Trump administration's Department of Labor recently filed a letter with the 5th Circuit Court of Appeals confirming that it intends to move forward with its plan to end Biden-era ESG investing standards.  The Biden-era rule allowed retirement plans to consider environmental, social and governance...

For business owners who may be reevaluating their employer matching contributions to retirement plans, it's important to remember that the terms of the plan dictates whether advance notice is required before terminating matching contributions.  The plan terms will dictate whether the matching contribution is mandatory...

by Prof. Robert Bloink and Prof. William H. Byrnes<br /> <br /> As clients amass their retirement dollars over their working years, tax situations are likely to become more complicated over time.  That’s especially true for clients who are fortunate enough to have the means to contribute after-tax dollars...

<span style="font-weight: 400;">It’s recently been reported that the Trump administration is considering issuing an executive order that would allow 401(k) plans to invest in private equity and other non-traditional investments. The order would direct the Department of Labor and the SEC to identify ways to integrate private equity investments into the 401(k) market. As of now, at least one large retirement plan provider has partnered with several investment firms to offer private equity investments within collective investment trusts. </span><br /> <br /> <span style="font-weight: 400;">We asked two professors and authors of ThinkAdvisor’s </span><i><span style="font-weight: 400;">Tax Facts </span></i><span style="font-weight: 400;">with opposing political viewpoints to share their opinions about Trump’s proposals to issue an executive ordering opening the ERISA retirement market to private equity investments. </span><br /> <br /> <span style="font-weight: 400;">Below is a summary of the debate that ensued between the two professors.</span><span style="font-weight: 400;"><br /> </span><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 /> <span style="font-weight: 400;"><strong>Byrnes:</strong> Allowing retirement plans to invest in private equity assets without fear would essentially open up these incredibly valuable investment opportunities to ordinary Americans who otherwise would not have the opportunity to participate in the heightened gains that can be realized through private market investing. By limiting retirement plans' abilities to offer private equity investments, we do a huge disservice to ordinary, hardworking retirement investors. </span><br /> <br /> <span style="font-weight: 400;"><strong>Bloink:</strong> While yes, the possibility for larger returns is always there with private equity, we're talking about hugely risky investment options here—and many hardworking Americans who cannot afford to shoulder the types of losses that can accompany a non-traditional investment portfolio. Private equity investments are extremely complicated, lack transparency and at the end of the day, aren't always particularly liquid. </span><br /> <br /> _________________________________<br /> <br /> <span style="font-weight: 400;"><strong>Byrnes:</strong> There's no reason hard working Americans shouldn't be offered the same opportunities to secure strong returns on investments with private equity offerings. Yes, private equity investments can be complicated—but there’s no reason why we can’t offer the education that ordinary retirement investors deserve. With sufficient information, the investor can determine whether they believe any given private equity investment is a smart idea and whether they’re willing to take the risk and potentially secure a huge payoff when an investment does deliver.</span><br /> <br /> <span style="font-weight: 400;"><strong>Bloink:</strong> Trump's proposal to offer private equity to any retirement investor may give the largest private equity firms a chance to rake in even larger returns—likely the impetus behind the new proposals--but at what cost? Complex and risky private equity investments generally are only suited to those investors who can afford to take the loss--and who perhaps have a more detailed understanding of what private equity investing entails and how to diversify to limit the impact of any given loss. </span><br /> <br /> _________________________________<br /> <br /> <span style="font-weight: 400;"><strong>Byrnes:</strong> American retirement investors should be free to make their own investm</span><span style="font-weight: 400;">ent decisions, not simply be limited to those choices that the government arbitrarily decides are "safe" enough for retirement investing. Private equity investments are already becoming more widely available. Ordinary retirement investors can, and should, be given the tools that they need to evaluate and select their own investments—regardless of what those investments entail.</span><br /> <br /> <span style="font-weight: 400;"><strong>Bloink:</strong> ERISA retirement plan sponsors would face huge litigation risk even if they took steps to educate investors about the risks and complexities associated with private equity investments. These simply aren't the types of sound investments that we should be encouraging everyday retirement investors to undertake. We already have a wide range of investment risk profiles available—introducing some of the riskiest investments is highly likely to cause situations where we see Americans losing their retirement nest eggs due to high-risk offerings.</span>