The Tax Cuts and Jobs Act represents one of the biggest changes our federal tax laws have seen in 30 years. The law is indexed as P.L. 115-97 or H.R. 1, and is formally named an act “To provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018.”
As part of the Tax Cuts and Jobs Act, Congress amended Internal Revenue Code Section 163(j), to add a new limitation on deduction of interest expense incurred in a trade or business. The new limitation applies to all businesses with net business interest expense, regardless of form of business (partnership, corporation, sole proprietor, etc.). It is effective for tax years beginning after December 31, 2017, with additional limitations introduced for years beginning after December 31, 2021. In general, the limitation disallows any net interest expense that is in excess of 30% of a taxpayer’s adjusted taxable income (“ATI”). Disallowed interest expenses due to this limitation can be indefinitely carried forward.
As part of the Tax Cuts and Jobs Act, Congress created Code Section 199A, providing owners of flow-through businesses and sole proprietors with a potential deduction, thereby allowing them to be more competitive with C Corporations, which under the Act saw tax rates reduced from 35% to 21%.
The Tax Cuts and Jobs Act (“TCJA”) recently passed by Congress and the President represents a true game changer for U.S. corporations, foreign corporations doing business in the U.S., and individuals and pass through entities with international investments and transactions. This article highlights international tax implications of the new law.
The following is a summary of some of the provisions of the Tax Cuts and Jobs Act that have the most significant impact on compensation and employee benefits. Please note that this is not intended to provide a comprehensive summary of all of the provisions of the Act that affect compensation and benefits.
In May 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-09 Financial Services—Insurance (Topic 944), Disclosures about Short-Duration Contracts. The purpose of this ASU is to improve and enhance the disclosures made in the financial statements of insurance entities.
In May of 2014, when the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update that significantly revised the accounting rules Companies must follow pertaining to Revenue Recognition from Contracts with Customers, the implementation dates seemed far away. These deadlines are now upon us, as many public companies this month are completing the first year to which these standards apply. Most private companies are about to enter the first applicable year.