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Josh Crisp

Are tax-free reorganizations possible? Absolutely. Internal Revenue Code Section 368(a)(1) allows for tax-free (or tax-deferred) reorganizations for certain acquisitions, divestitures, bankruptcies, and corporate restructurings. F-type reorganizations, which are a type of corporate restructuring permitted under subparagraph F, allow a single corporation to change their “identity, form, or place of organization” without incurring a tax bill. But F-type reorganizations can do so much more than that.

At the end of 2017, Congress enacted the qualified business income (QBI) deduction to provide owners of pass-through entities with a 20% profit reduction. The deduction is awarded to taxpayers whose individual taxable incomes stay below a certain threshold. If incomes rise high enough, they will be subject to an asset and wage limitation that may prevent them from receiving the full deduction.

The construction industry is still looking for ways to solve the worker shortage puzzle, an issue plaguing the industry. The problem started when the recession hit the industry hard resulting in large scale layoffs leaving qualified workers with no future job prospects. When the economy changed when the demand for new residential, commercial and other projects increased there were far fewer workers available. This has left many looking for new ways to fill the gap through more aggressive compensation and recruiting, as well as, the introduction of enhanced technology.

When the Tax Cuts and Jobs Act was passed in late 2017 many significant changes to the tax code were made. These changes were designed to make the U.S. more business-friendly by lowering business taxes and offering new saving opportunities. One such opportunity was the introduction of Qualified Opportunity Zones investment. In late December, the IRS issued final regulations covering a variety of investment details.

Section 199A, also called the qualified business income (QBI) deduction, gives owners of pass-through entities a deduction on their personal income tax returns for up to 20% of business income. This deduction can significantly reduce income tax burdens for those who qualify. Unfortunately, taxpayers’ deductions will be reduced if their taxable incomes are too high, and those who work in certain service industries may lose their deductions altogether. There is no perfect technique for avoiding this taxable income limitation but making additional charitable contributions may help.

Self-employed physicians, like many other business owners, are well into their second tax season following the principles outlined in the Tax Cuts and Jobs Act (TCJA). The qualified business income deduction (QBI deduction) – also known as Section 199A – continues to play an important role in year-end planning discussions. As the year ends, it is a good time to revise prior year’s QBI deduction strategies.

Earlier this month, the Financial Accounting Standards Board (FASB) announced they extended the effective dates for the new lease accounting standard. It had been rumored for months that the FASB would make this adjustment for non-public entities, and the day has finally come. Public entities struggled to overhaul their business processes in time to comply by their effective date of January 1st of this year, and non-public entities implored the FASB to help them avoid a similar result. The FASB heard these requests from industry groups, professional organizations, and private businesses nationwide and agreed to push back the effective date for non-public entities.

On September 24, 2019, the IRS released a final revenue procedure that helps taxpayers with rental real estate activities to understand how to apply Section 199A. Section 199A often referred to as the qualified business income deduction (QBI deduction), lets business owners deduct 20% of the qualified business income they report from pass-through entities or sole proprietorships. When Congress wrote the QBI deduction into law by passing the Tax Cuts and Jobs Act (TCJA), taxpayers participating in rental real estate activities were unsure if they were eligible for the deduction. The law did not specify when a rental real estate activity would be considered a trade or business worthy of the deduction.

Last month the IRS released important regulations designed to help Atlanta business owners understand how to implement the 100% bonus depreciation which was enacted as part of the Tax Cuts and Jobs Act of 2017 (tax reform). Although the proposed rules did allow for certain depreciation to be leveraged under various conditions, the IRS has been in the process of reviewing changes for some time. On September 13, 2019, they issued final regulations that provide much-needed guidance on how and when bonus depreciation rules can be applied.

The Tax Cuts and Jobs Act of 2017 (tax reform) challenged some long-held assumptions many businesses have about how and when to use bonus depreciation. The changes ushered in through tax reform have transformed how to use bonus depreciation allowing for an expansion of benefits in some respects and a contraction in others. Atlanta business owners that rely on bonus depreciation as part of their tax savings strategy need to be aware of the changes and how it will impact their approach. To help clients, prospects, and others, Wilson Lewis has provided a comprehensive summary of the changes and key considerations