The recently enacted Tax Cuts and Jobs Act (TCJA) has altered the tax landscape for a lot of businesses. The changes are extensive, and this blog provides a high-level overview of some of the highlights to keep you informed. Due to the sweeping nature of the changes and the need for continued guidance, we’d like the opportunity to have a personalized conversation with you now to discuss planning opportunities for your specific situation. Additional conversations and tax projections are likely necessary to ensure we maximize your tax benefits. Please call our office at your earliest convenience to schedule a meeting.
Net operating losses (NOLs)
Under the prior tax law, NOLs could be carried back two years or carried forward for 20 years. Unfortunately, the TCJA repealed the ability to carry back a NOL and claim a refund for already-paid taxes, effective for tax years ending after Dec. 31, 2017. If you have a tax situation that resulted in a NOL, we can advise you of the best options. For tax years beginning after 2017, the NOL may offset up to 80% of taxable income.
If you have a tax situation that resulted in a NOL, we can advise you of the best options. 262-358-8297 give our office a call.
IRS has released the Code § 280F depreciation limits for business passenger automobiles placed in service by the taxpayer in 2018, taking into account the changes made by the Tax Cuts and Jobs Act . IRS has also released the annual income inclusion amounts for such vehicles first leased in 2018.
The tax law limits the amount you can deduct for depreciation of your car, truck or van. The § 179 deduction is also treated as depreciation for purposes of these limits. The maximum amount you can deduct each year depends on the year you place the car in service. The 2018 luxury vehicle limits are below.
The TCJA modified Code § 168( k) to extend the additional (bonus) first-year depreciation deduction for qualified property acquired and placed in service after Sept. 27, 2017, and before Jan. 1, 2027.
Under the TCJA, a 100% bonus first-year deduction of the adjusted basis is generally allowed for qualified property acquired and placed in service after Sept. 27, 2017, and before Jan. 1, 2023 (for certain property with longer production periods, the end date is increased by one year). In later years, the first-year bonus depreciation deduction phases down, as follows:
In the case of a passenger automobile, for qualified property acquired by the taxpayer before Sept. 28, 2017, and placed in service by the taxpayer during 2018, Code § 168( k)))(2)(F)(iii) increases the first-year depreciation allowed under Code Sec. 280F by $6,400. For qualified property acquired and placed in service after Sept. 27, 2017, Code § 168( k)(2)(F)(i) increases the first-year depreciation allowed under Code § 280F by $8,000.
Guidance. The following are the annual depreciation dollar caps for vehicles that are subject to the luxury auto limits of Code § 280F and are placed in service by the taxpayer in calendar year 2018. As Code § 280F(a), as amended by the TCJA, provides the limits on depreciation for passenger automobiles placed in service during calendar year 2018, no adjustment for inflation applies to calendar year 2018.
The depreciation limits for passenger automobiles acquired by the taxpayer before Sept. 28, 2017, and placed in service by the taxpayer during calendar year 2018, for which the Code § 168( k) bonus first-year depreciation deduction applies, are:
The depreciation limits for passenger automobiles acquired by the taxpayer after Sept. 27, 2017, and placed in service by the taxpayer during calendar year 2018, for which the Code § 168( k) bonus first year depreciation deduction applies, are:
The depreciation limits for passenger automobiles placed in service during calendar year 2018 for which no Code § 168( k) bonus first-year depreciation deduction applies are:
By Firm Staff
With regards to the recent Tax Reform it is unclear if Fringe benefits will be a good thing. In the Case of the S Corp it may or may not be if you own more than 2% of the company. Regardless if you benefit the Federal tax law does allow the cost of fringes benefits as an deductible expenses for your S corporation tax return.
However, Shareholders who owns more than 2%, may suffer additional taxes on some of the benefits because the tax code requires your corporation to put selected benefits on your W-2. The outcome is sometimes favorable and sometimes not.
The rule that cases this concern is the following:
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Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.
Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.