TaxEsqBlog -by Ronald J. Cappuccio, J.D., LL.M.(Tax)

Client Letter concerning the Latest Tax Reforms and Developments to Individuals The following is a summary of important tax developments that have occurred in the past three months that may affect you, your family, your investments, and your livelihood. Please call me at 856-665-2121 for more information about any of these developments and what steps you should implement to take advantage of favorable developments and to minimize the impact of those that are unfavorable. Major Tax Reform . On December 22, President Trump signed into law the "Tax Cuts and Jobs Act" (P.L. 115-97), a sweeping tax reform law that will entirely change the tax landscape. Even though this is being referred to by politicians, the news media, and so-called opinion leaders as tax reform is really not reform. It is change. It is not a simplification of our tax system and in fact make some things more complex. Even though this will have a dramatic impact on most taxpayers, it is not the comprehensi...

The TCJA temporarily expands bonus depreciation The Tax Cuts and Jobs Act (TCJA) enhances some tax breaks for businesses while reducing or eliminating others. One break it enhances — temporarily — is bonus depreciation. While most TCJA provisions go into effect for the 2018 tax year, you might be able to benefit from the bonus depreciation enhancements when you file your 2017 tax return. Pre-TCJA bonus depreciation Under pre-TCJA law, for qualified new assets that your business placed in service in 2017, you can claim a 50% first-year bonus depreciation deduction. Used assets don’t qualify. This tax break is available for the cost of new computer systems, purchased software, vehicles, machinery, equipment, office furniture, etc. In addition, 50% bonus depreciation can be claimed for qualified improvement property, which means any qualified improvement to the interior portion of a nonresidential building if the improvement is placed in service after the date the building is...

Why 2016 may be an especially good year to take bonus depreciation Bonus depreciation allows businesses to recover the costs of depreciable property more quickly by claiming additional first-year depreciation for qualified assets. The PATH Act, signed into law a little over a year ago, extended 50% bonus depreciation through 2017. Claiming this break is generally beneficial, though in some cases a business might save more tax in the long run if they forgo it. However, 2016 may be an especially good year to take bonus depreciation. Keep this in mind when you’re filing your 2016 tax return. Eligible assets New tangible property with a recovery period of 20 years or less (such as office furniture and equipment) qualifies for bonus depreciation. So does off-the-shelf computer software, water utility property and qualified improvement property. And beginning in 2016, the qualified improvement property doesn’t have to be leased It isn’t enough, however, to have acquired the proper...

Congress refuses to actually simplify the Internal Revenue Code. Since the 1986 tax Reform Act, Congress has passed more than 30,000 amendments to the Internal Revenue Code. Instead of simplification, Congress is now proposing a disguise tax increase for businesses. Under our present federal corporate structure, if an individual owns a limited liability company or a sole proprietorship, the entity is not tax separately. Rather the income is added to the individual's own tax. That is also true for partnerships and limited partnerships. Congress wants to change this to add a 25% tax at the business level. This will mean that small businesses will now be facing the same double tax problem that large businesses have. In addition there will have to be a whole series of new forms and a complete rewrite of a portion of the Internal Revenue Code for this new scheme. Instead of moving in the right direction, Congress is moving in the wrong direction! Please see this interesting articl...