TCJA Hot Topics: Tax Reform Highlights
Marty Doerr, Partner in Charge of Tax Services, is responsible for overall client service and technical oversight of the Tax practice. His expertise includes mergers and acquisitions, compensation planning, inventory and other accounting methods. Check out a few typical client questions Marty has been answering in light of the Tax Cuts and Jobs Act of 2017 (TCJA):
Q: There are a lot of unanswered questions regarding TCJA. Will we likely get answers to those questions soon?
A: When we have a tax overhaul bill, there is generally a follow-up Technical Corrections Act that attempts to fix any drafting issues that came up. The way the bill was passed could cause problems for Republicans trying to fix the errors: there may not be any Democratic eagerness to help. If there is a filibuster in the future, the only remedy the Republicans have is to go back to budget reconciliation, which is filibuster-proof. However, “technical corrections” by definition doesn’t have a revenue impact – so budget reconciliation is problematic. We do not know if there will be a Technical Corrections Act in the near future or not.
Q: I entertain clients, local business professionals, and employees as a way to network, show client appreciation, and improve workplace morale. Does the new tax law affect how I can incorporate meals and entertainment into my business plan?
A: Entertainment has been completely stricken as a possible deduction, and the deductions for meals have changed. The best plan is to create a new tracking sheet for three categories: entertainment (0 percent deduction); meals, drinks, and fringe benefits such as a coffee break room (50 percent deduction); and meals/drinks for full company functions (100 percent deduction). Some say you can’t deduct “fun.” The impact of the deduction changes will depend on your business.