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TAX LAW

Income Taxation of Individuals. Inclusion in income. Offsetting liabilities. Gifts and bequests. Life insurance, annuities and employee death benefits. Compensation for personal injuries and sickness. Employee benefits. Interest on state and local obligations. Expenses incurred in business and profit-oriented activities. Cost recovery, depreciation and amortization. Loss transactions. Business operating deductions and tax shelter deductions. Personal exemptions and itemized deductions. Interest on indebtedness. Taxes. Bad debts. Casualty losses. Charitable contributions. Medical expenses. Realization of gains and losses. Sales of property. Non-recognition transactions. Capital gains and losses. Assignments of income. Grantor trusts. Deferred compensation.

Income Taxation of Trusts and Estates. Computation of taxable income and tax liability. Distributable net income. Allocation of tax among beneficiaries. Current distributions. Grantor and controlled trusts. Powers to revoke or control trust. Retained interest in trust income. Administrative powers. Beneficiary-controlled trusts. Foreign trusts. Charitable trusts. Income in respect of decedents. Procedure, administration and compliance.

Corporate Taxation. Elections under Subchapter S. Debt vs. equity. Undistributed corporate income. Dividends and non-liquidating distributions. Stock redemptions. Liquidations and stock distributions. Divisions and reorganizations.

Taxation of Subchapter S Corporations. Eligibility. Election of Subchapter S status. Termination of Subchapter S status. Organization, capitalization and shareholder agreements. Taxation of income, losses, deductions and credits. Distributions. Basis of stock and debt. Compensation. Reorganizations and divisions. Liquidations, redemptions, sales and purchases. Procedural matters.

Real Estate Taxation. Residential real  estate. Purchase, ownership and sale of residence. Leases. Acquisition, disposition and improvement of leaseholds. Operating expenses, taxes and depreciation. Mortgage and Equity Financing. Financing, settlement and foreclosure. Sales, Exchanges and Conversions. Installment sales. Exchanges. Involuntary conversions. Tax Planning. Development and ownership of residential real estate. Increasing deductions in realty operations. Tax planning for sales.

Transfer Taxes. Estate Tax. Imposition. Credits. Gross estate. Taxable estate. Estates of non-resident aliens. Gift Tax. Determination of liability. Transfers subject to tax. Gift tax deductions. Generation Skipping Transfers.

Income Taxation of Partnerships and Partners. Defining partners and partnerships under Subchapter K. Acquisition of partnership interests. Contributions of property and services. Determining the basis of a partner’s partnership interest. Basis consequences of partnership liabilities. Tax accounting for partnership operations. Partners’ distributive shares. Partner allocations. Termination of partnership. Sales, exchanges and transfers of partnership interests. Partnership distributions. Death or retirement of partner. Adjustments to partnership basis.

TAX CUTS AND JOBS ACTAmends the Internal Revenue Code to reduce tax rates and modify policies, credits and deductions for individuals and businesses

Regarding Individuals, the Act:

  • Lowers most individual income tax rates, including the top marginal rate from 39.6% to 37%. Retains the current seven-bracket structure, but bracket widths are modified. Increases tax brackets and other provisions by the CPI measure of inflation.
  • Increases the standard deduction.
  • Eliminates the personal exemption.
  • Retains the charitable contribution deduction.
  • Limits the mortgage interest deduction to the first $750,000 in principal value.
  • Limits the deduction for state and local income taxes to $10,000.
  • Raises the exemption on the alternative minimum tax to $500,000 for individuals ($1 million for couples).
  • Repeals the individual mandate penalty of the Affordable Care Act.
  • Alimony paid to a former spouse will no longer be deductible, and will no longer be included in the recipient’s income.

Regarding the Estate Tax:

  • Under 2017 law, estates that exceeded $5.6 million were subject to a 40% tax at date of death. The Act doubles the estate tax exemption from $5.6 million to $11.2 million ($11.2 million to $22.4 million for married couples). The exemption will increase with inflation and expire on December 31, 2025.

Regarding Businesses, the Act:

  • Reduces the corporate tax rate from a maximum of 35% to 21%.
  • Establishes a 20% deduction of qualified business income from certain pass-through entities. Specific service industries, such as health, law and professional services, are excluded.
  • Allows increased expensing of the costs of certain property. Allows immediate expensing of certain capital expenditures. Increases Section 179 expensing to $1 million.
  • Limits the deduction of net interest expense to 30% of earnings.
  • Reduces net operating loss carrybacks and carryforwards.
  • Modifies the taxation of foreign income.
  • Repeals the corporate alternative minimum tax.

 

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