Year-End Tax Planning

Transcription

1 Year-End Tax Planning Metairie November 29, 2017 assurance - consulting - tax - technology - pncpa.com Postlethwaite & Netterville, A Professional Accounting Corporation

2 2 Agenda

3 2017 Business Tax Update Greg Booth assurance - consulting - tax - technology - pncpa.com Postlethwaite & Netterville, A Professional Accounting Corporation

4 4 Overview Our Hour of Fun

5 Overview Tax Bills I m Just a Bill (Schoolhouse Rock) 5

6 6 Tax Reform

7 Tax Reform Corporate Tax Rates House Change graduated rates to a flat 20% tax rate for most corporations Personal service corporations would be taxed at a 25% corporate rate Senate Changes graduated rates to a flat 20% tax rate for corporations Eliminates special tax rate for personal service corporations Effective in 2018 Effective in 2019 Joint Committee on Taxation estimates this would reduce revenue by $ billion over Joint Committee on Taxation estimates this would reduce revenue by $ billion over

8 Tax Reform Dividend Received Deduction House Modifies 70% dividend received deduction to a 50% deduction Modifies 80% deduction for dividend received from a 20% owned corporation to 65% Senate Modifies 70% dividend received deduction to a 50% deduction Modifies 80% deduction for dividend received from a 20% owned corporation to 65% Effective in 2018 Effective in

9 Tax Reform Business Expensing House Allows for 100% expensing of qualified property placed in service after September 27, 2017 and before January 1, 2023 Repeal requirement that original use of qualified property begin with the taxpayer, allowing property to qualify if it is the taxpayer s first use Not available for real property trade or business or businesses with floor plan financing if such business opted out of the interest deduction limitations Senate Similar expansion of 100% expensing as in house proposal Would continue to only apply to new property Not available for real property trade or businesses that opt to not apply interest limitation 9

10 Tax Reform Real Property Business Expensing House Senate Not addressed Shortens recovery period for nonresidential real property and residential real property to 25 years Eliminates distinctions between qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property and provides a general 10 year recovery period for qualified improvement property (with a 20-year ADS period) Shorten ADS recovery period for residential real property to 30 years 10

11 Tax Reform 179 Business Expensing House Senate Increases expense amount to $5,000,000 Increases expense amount to $1,000,000 Increases phase-out threshold to $20,000,000 Increases phase-out threshold to $2,500,000 Expands the definition of qualified real property eligible for section 179 to include certain qualified energy efficient heating and air conditioning property Expands the application of section 179 to depreciable tangible personal property used predominantly to furnish lodging or in connection with furnishing lodging Expands the definition of qualified real property eligible for section 179 to include certain improvements to nonresidential real property: roofs, heating, ventilation, and air conditioning property; fire protection and alarm systems; security systems. 11

12 Tax Reform Interest Expense House Disallows deduction of net interest in excess of 30% of the business s adjusted taxable income, regardless of business form, determined at tax-filer level Allows carry forward of disallowed interest for five years Businesses with average gross receipts of $25,000,000 or less would be exempt from the interest limitations Effective in 2018 Senate Limits deduction for business interest to the sum of business interest income plus 30% of adjusted taxable income of the taxpayer for the taxable year (thus limits net interest expense to 30% of adjusted taxable income, as the House Bill does), determined at tax-filer level Provides for double-counting rules for pass-through and allows additional deduction for a partner of a partnership to the extent the partnership could have deducted more business interest Allows carry forward of disallowed interest deduction indefinitely Limitations do not apply to businesses who meet the $15,000,000 gross receipts test 12

13 Tax Reform Accounting Method Changes House Increases availability of cash method to corporations and partnerships with corporate partners to $25,000,000 and repeals the requirement the business satisfy such requirement for all prior years Allows for the use of the cash method for business with average gross receipts of $25,000,000 or less, even if the business has inventories Senate Increases availability of cash method to those C- corporations and partnerships with corporate partners whose annual average gross receipts do not exceed $15,000,000 for the three prior taxable years Increases exemption for inventory accounting to taxpayers that meet the $15,000,000 gross receipts test Exempts businesses with average gross receipts of $25,000,000 from UNICAP rules Exempts businesses with average gross receipts of $15,000,000 from UNICAP rules 13 Increases the threshold for the exception to the percentage-of-completion method for long-term contracts to $25,000,000 Expands the application of the exception from the percentage-of-completion method to those contracts that meet the 2 year threshold and are performed by a taxpayer that meets the $15,000,000 gross receipt test for the current year

14 Tax Reform Accounting Method Changes House Senate Not addressed Conformity of income recognition with applicable financial statement Codify current deferral regime for advanced payments for goods and services per Rev. Proc

15 Tax Reform Business Deductions House Repeal domestic production activities deduction (effective Jan 1, 2018) Senate Repeal domestic production activities deduction (effective Jan 1, 2019) Repeals local lobbying expense deduction Not addressed Repeals deduction for entertainment, amusement, recreation activities, facilities, or membership dues; retains 50% deduction on food/beverages Repeals deduction for entertainment, amusement, recreation activities, facilities, or membership dues; retains 50% deduction on food/beverages Limitation on deduction for FDIC premiums Not addressed Repeal of rollover of publicly traded securities gain into SSBIC Not addressed 15

16 Tax Reform Business Credits House Repeals credit for clinical testing expenses for certain drugs for rare diseases Senate Repeals employer-provided childcare credit Not addressed Limits credit for clinical testing expenses for certain drugs for rare diseases Repeals rehabilitation credit Limits rehabilitation credit 20% historic credit remains, but taken over 5 years Repeal of work opportunity credit Not addressed Repeal of deduction for certain unused business credits Repeal of deduction for certain unused business credits (same as House proposal) Repeals new markets tax credit Not addressed 16 Repeal of credit for expenditures to provide access to disabled individuals Not addressed

17 Tax Reform Corporate Net Operating Losses House NOLs limited to 90% of taxpayer s income Repeal of carryback of NOLs (special one year carryback for small business and farming losses) NOL carry forward increased by an interest factor Applies to corporate and non-corporate NOLs Senate Limits NOL deduction to 90% of taxable income determined without regard to the deduction Creates indefinite carry forward of disallowed losses Repeals carry-back in most cases, but retains 2 year carryback for certain farming losses Would limit NOL deduction to 80% for tax years beginning after 12/31/2022 and before 12/31/2025. Would revert back to 90% if certain revenue targets are met. 17

18 Tax Reform Like-Kind Exchanges House Limits application of like-kind exchange rule to transactions with respect to real property Senate Similar to House rule by limiting like-kind exchange rule to real property not held primarily for sale 18

19 Tax Reform Contribution to Capital House Modifies current law such that contributions to capital would be included in gross income to the extent the amount of money and property received exceeds the fair market value of stock in exchange for such money or property Also applicable to noncorporate entities Senate No change 19

20 Tax Reform Energy Credits House Clarifies certain provisions of the credit for electricity produced from certain renewable resources Streamlines treatment of property under the energy investment tax credit Credit for residential energy efficient property would be extended for all qualified property placed in service prior to 2022, subject to a reduced rate for property placed in service during 2020 and 2021 Repeals enhanced oil recovery credit Repeals credit for producing oil and gas from marginal wells Modifications to credit for production from advanced nuclear power facilities Senate No changes to energy credits 20

21 Tax Reform Rules Relating to Intellectual Property House Streamlines rules around self-created intellectual property such that gain or loss from the disposition of a self-created patent, invention, model or design, or secret formula would be ordinary in character Repeal of special rule allowing for the transfer of a patent prior to its commercial exploitation to qualify as long-term capital gain Senate No changes to intellectual property rules 21

22 Pass-through Business Income

23 Business Income House Business Income max rate of 25% instead of ordinary rate as high as 39.6% In lieu of 12% rate, 9% rate on first $75,000 on active owner earning less than $150,000 through a pass-through business Special rate phases out at $225,000 Phased in special rate, 11% for 2018 and 2019, 10% for 2020 and 2021 and 9% after. Single amount is $37,500 and $75,000 Defining business income reference to capital percentage Passive member 100% Active member 30% Certain service business 0% Income not classified as business income is subject to ordinary rates Senate Allows a deduction of 17.4% of domestic qualified business income from a partnership, S corporation or sole proprietorship Deduction does not apply to service businesses, except in the case of a taxpayer whose income does not exceed $150,000 (or $75,000 for single). This special treatment begins to phase out when income reaches $50,000 (or $25,000 for single). Deduction is limited to 50% of W-2 Wages Does not apply to any amount paid by an S corporation for reasonable compensation or guaranteed payments to a partner Special rate also does not apply to investment type income such as interest, dividends and capital gain. Must qualify as a trade or business 23

24 Business Income House Business Income service business Capital percent is deemed to be 0% Applies to services in the field of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, financial services, brokerage services or any trade or business where the principal asset of such trade or business is the reputation or skill of 1 or more of its employees and certain securities and commodities trading Senate Not addressed 24

25 Business Income House Can elect to determine capital percent using formula (election irrevocable for 5 years) Short term AFR plus 7 percent times asset balance = specified return on capital Specified return on capital divided by income derived from activity determines applicable percent this is used as the capital percent Senate Not addressed 25

26 Business Income Self Employment House No specific reform of SE Tax Original HR 1 would have subjected all passthrough labor income to SE Tax, including certain rental income of active members. Provision was removed in final Ways and Means markup. Senate No specific reform of SE Tax 26

27 Business Income Non-Corporate Losses House NOLs limited to 90% of taxpayer s income Repeal of carryback of NOLs (special one year carryback for small business and farming losses) NOL carryforward increased by an interest factor Applies to corporate and non-corporate NOLs Senate NOL limited to 90% of taxable income Excess business loss not allowed in a given year and are added to NOL. Excess business loss is defined as the excess of deductions attributable to trade or business over the income of the taxpayer PLUS a threshold amount. $500,000 for joint $250,000 for single Example current year business deductions are $1,000,000. Taxpayer has business income of $250,000. Taxpayers threshold amount is $500,000. Taxpayers excess business loss is $250,000. Taxpayer can use the $500,000 in the current year to offset other income. 27

28 Business Income Carried Interest House Waiting period of 3 years to obtain long term capital gain treatment on the sale of certain partnership interests Senate Similar to House bill would apply to certain partnership interests received for services 28

29 Partnerships Technical Terminations House Senate Repeal of technical termination rules No Change 29

30 Multinational Entity Taxation House Moves from a worldwide system of taxation to a territorial system. U.S. corporate shareholders that own 10% or more of a foreign corporation would receive a 100% exemption on the foreign-sourced portion of dividends paid by the foreign corporation to the U.S. shareholder. A repatriation of previously deferred foreign earnings would be taxed at a 14% rate on cash and equivalents and a 7% rate on illiquid assets. Senate Similar to the House bill, the Senate bill would move from a worldwide system to a territorial system. U.S. corporate shareholders that owns 10% or more of a foreign corporation would receive a 100% exemption on the foreign-sourced portion of dividends paid by the foreign corporation to the U.S. shareholder. A repatriation of previously deferred foreign earnings would be taxed at 10% rate on cash and equivalents and a 5% rate on illiquid assets. 30

31 Effective Laws

32 Effective Laws

33 33 Partnership Audit Reform

34 34 Partnership Audit Reform

35 Questions??

36 Contact 36

37 Year End Tax Planning for Individuals Mandy Gerrets, CPA Stephen Blitz, CPA assurance - consulting - tax - technology - pncpa.com Postlethwaite & Netterville, A Professional Accounting Corporation

38 3838 Agenda

39 Tax Reform Review of Proposals

40 40 Overview: where we are today

41 Current Tax Structure Rate Taxable Income Taxable Income Rate Single Married Single Married 10% $0 to $9,325 $0 to $18,650 10% $0 to $9,525 $0 to $19,050 15% $9,326 to $37,950 $18,651 to $75,900 15% $9,526 to $38,700 $19,051 to $77,400 25% $37,951 to $91,900 $75,901 to $153,100 25% $38,701 to $93,700 $77,401 to $156,150 28% $91,901 to $191,650 $153,101 to $233,350 28% $93,701 to $195,450 $156,151 to $237,950 33% $191,651 to $416,700 $233,351 to $416,700 33% $195,451 to $424,950 $237,951 to $424,950 35% $416,701 to $418,400 $416,701 to $470,700 35% $424,951 to $426,700 $424,951 to $480, % $418,401 or more $470,701 or more 39.6% $426,701 or more $480,051 or more Standard Deduction $6,350 $12,700 Personal Exemption Child Tax Credit Current Law (2017) Standard Deduction $6,500 $13,000 Personal $4,050 per person Exemption $4,150 per person $1,000 Child Tax Credit Current Law (2018) $1,000 41

42 Tax Structure under Reform Proposals Rate House Bill Senate Bill (modified Chairman's mark) Taxable Income Taxable Income Rate Single Married Single Married 10% $0 to $9,525 $0 to $19,050 12% $0 to $45,000 $0 to $90,000 12% $9,526 to $38,700 $19,051 to $77,400 25% $45,001 to $200,000 $90,001 to $260,000 22% $38,701 to $70,000 $77,401 to $140,000 35% $200,001 to $500,000 $260,001 to $1,000,000 24% $70,001 to $160,000 $140,001 to $320, % $500,001 or more $1,000,000 or more 32% $160,001 to $200,000 $320,001 to $400,000 35% $200,001 to $500,000 $400,001 to $1million 38.5% Over $500,000 Over $1 million Standard Deduction $12,200 $24,400 Standard Deduction $12,000 $24,000 Personal Exemption Eliminated Eliminated Personal Exemption Eliminated Eliminated Child Tax Child Tax Credit $1,600 ($300 for non-child dependents)* Credit $2,000 ($500 for non-child dependents) Family Tax Family Tax Credit n/a $300 for each spouse** Credit n/a *Taxable income limits will be increased ($230,000 joint/$115,000 single) Proposal is effective for tax years beginning after December 31, 2017 **Sunsets in 2023 Provisions would expire for tax years after December 31, NOTE: Penalty of $500 is imposed on preparers for failure to meet due diligence in determining HOH eligibility

43 43 Capital Gains Rates & Medicare Tax HR 1

44 Capital Gains Rates & Medicare Tax Senate Taxable Income Exceeding Single Joint Ordinary Capital Gain/Qualified Dividends $0 $0 10% $9,525 $19,050 $38,600 $77,200 12% $38,700 $77,400 22% $70,000 $140,000 24% $160,000 $320,000 32% $200,000 $400,000 $425,800 $479,000 35% $500,000 $1,000, % 0% 15% 20% Rates Medicare Tax on Earned Income Medicare Tax on NIIT 2.9% 0% 3.8% 3.8% 44

45 Tax Reform Standard Deduction/PE House Married filing joint - $24,400 Single - $12,200 HOH - $18,300 Senate Married filing joint - $24,000 Single - $12,000 HOH - $18,000 Repeals personal exemptions ($4,050 for 2017) Repeals personal exemptions 45

46 Tax Reform Itemized Deductions 46 House Repeals overall limitations on itemized deductions Mortgage interest Limits to $500,000 Principal residence No home equity loan Grandfather provision for acquisition debt before Nov 2 State and local tax deduction Limited to $10,000 of property tax No deduction even if paid in carrying on a trade or business (not clear whether permitted as a deduction when incurred in a trade or business) Senate Repeals overall limitations on itemized deductions Mortgage interest Maintains current levels ($1M) No deduction for home equity loans Principal residence plus one other residence State and local tax deduction Permitted as a deduction when paid in carrying on a trade or business or section 212 activity

47 Tax Reform Itemized Deductions House Personal casualty loss Repealed except for losses allowed under special disaster relief legislation Senate Personal casualty loss Repealed except for losses incurred in a Presidentially declared disaster Tax Prep fee deduction repealed Tax Prep fee deduction - repealed Miscellaneous itemized deductions generally not repealed, except for unreimbursed employee expenses Gambling losses maintains gambling loss deduction but clarifies that all deductions incurred in carrying out wagering is limited to gains Miscellaneous itemized deductions repealed Includes unreimbursed employee expenses Gambling losses similar to House bill 47

48 Tax Reform Itemized Deductions House Charitable contributions Increases limit to 60% of AGI for cash paid to public charities Removes deduction for amounts paid for right to purchase tickets to athletic events Moving expense repealed except for those incurred by a member of the Armed Forces Senate Charitable contributions Increases limit to 60% of AGI for cash paid to public charities Removes deduction for amounts paid for right to purchase tickets to athletic events Moving expense repealed except for those incurred by a member of the Armed Forces Medical expenses repealed Medical expenses unchanged Investment interest expense allowed Investment interest expense allowed 48

49 Tax Reform Other Deductions 49 House Sale of Principal Residence Changes from 2 out of 5 year test to 5 out of 8 year test Alimony expenses repealed Effective for any divorce decree executed after 2017 Other employee expenses that are allowed as above the line deductions except those of members of military reserve and reimbursed expenses included in employee s income Senate Sale of Principal Residence Changes from 2 out of 5 year test to 5 out of 8 year test Provision to apply a fraction if test is unmet due to change of employment, health Exclude gain from sale once every 5 years Alimony expenses unchanged Educator expenses $500

50 Tax Reform Credits House Child Tax Credit Increases it to $1,600, with up to $1,100 being refundable Child under 17 Must have SSN for refundable $300 nonrefundable credit family flexible credit non-child dependent Phases out $115,000/$230,000 Repeal all other nonrefundable credits Credit for individuals over 65 Retired on disability Mortgage credit certificates Plug-in electric motor vehicles Senate Child Tax Credit Increases it to $2,000, with up to $1,100 being refundable Child under 18 Must have SSN for refundable $500 nonrefundable credit for nonchild dependent Phases out $500,000/$1,000,000 Not addressed 50

51 Tax Reform AMT House Senate REPEAL (Individual) REPEAL (Individual) but will expire after December 31,

52 Tax Reform ACA House Senate No provisions Repeal of the ACA s Individual Mandate 52

53 Examples: many factors will determine impact Single Filer Current Law House Bill Senate Bill Income $75,000 $75,000 $75,000 Itemized Deductions n/a n/a n/a Standard Deduction $6,350 $12,200 $12,000 Personal Exemptions $4,050 n/a (eliminated) n/a (eliminated) Taxable Income $64,600 $62,800 $63,000 Marginal Tax Rate 25% 25% 25% Cash Tax Liability $11,928 $9,850 $9, About 70% of Americans claim the standard deduction. These taxpayers are almost certain to see an increase in their paychecks under the new tax structures.

54 Examples: many factors will determine impact Joint Filer Family of 4 Current Law House Bill Senate Bill Income $75,000 $75,000 $75,000 Itemized Deductions n/a n/a n/a Standard Deduction $12,700 $24,400 $24,000 Personal Exemptions $16,200 ($4,050 per) n/a (eliminated) n/a (eliminated) Taxable Income $46,100 $50,600 $51,000 Marginal Tax Rate 15% 12% 12% Tax Liability $5,983 $6,072 $5,739 Child Tax Credit $2,000 $3,200 $4,000 Family Tax Credit n/a $600 n/a Cash Tax Liability $3,983 $2,272 $1, About 70% of Americans claim the standard deduction. These taxpayers are almost certain to see an increase in their paychecks under the new tax structures.

55 Examples: many factors will determine impact Joint Filers 4 Person Family Current Law House Bill Senate Bill Income $175,000 $175,000 $175,000 Itemized Deductions $27,000* n/a n/a Standard Deduction n/a $24,400 $24,000 Personal Exemptions $16,200 ($4,050/per) n/a n/a Taxable Income $131,800 $150,600 $151,000 Marginal Tax Rate 25% 25% 24% Tax Liability $24,428 $25,950 $25,319 Child Credit n/a** $3,200 $4,000 Family Tax Credit n/a $600 n/a Cash Tax Liability $24,428 $22,150 $21, Assumptions: 2 children under age 17 and this family will itemized for 2017 *Average itemized deductions reported in the IRS Statistics of Income Bulletin, Spring 2017 **Phased out by $50 for each $1,000 that MAGI exceeds $110,000 for married filing jointly

56 Examples: many factors will determine impact Joint Filers 4 Person Family Current Law House Bill Senate Bill Income $175,000* $175,000* $175,000* Itemized Deductions $27,000** n/a n/a Standard Deduction n/a $24,400 $24,000 Personal Exemptions $16,200 ($4,050/per) n/a n/a Taxable Income $131,800 $150,600 $151,000 Marginal Tax Rate 25% 25% 24% Tax Liability $24,428 $25,950 $25,319 Family Tax Credit n/a $600 n/a Cash Tax Liability $24,428 $25,350 $25, Assumptions: 2 children not under age 18 and this family will itemized for 2017 (no child credits) *Of taxpayers that itemize, 86.8% have an AGI below $200,000 **Average itemized deductions reported in the IRS Statistics of Income Bulletin, Spring 2017

57 57 Our thoughts Is this bill really massive tax relief?

58 Tax Reform Kiddie Tax House Senate Slightly modified to take into account new rates Applies trust and estate brackets to the net unearned income Earned income is taxed under normal rules 58

59 Tax Reform Fringe Benefits House Senate Unchanged Qualified bicycle commuting reimbursement - repealed Employer provided housing exclusion limited to $50,000 and phase out completely for income over $120,000 Exclusion for employee achievement awards repealed Exclusion for dependent care assistance programs repealed in 2023 Exclusion for qualified moving expense reimbursement repealed except for active-duty members of the US Armed Forces who move pursuant to a military order Not addressed Not addressed Not addressed Exclusion for qualified moving expense reimbursement repealed 59

60 Tax Reform Retirement House Nonqualified deferred compensation original HB would tax upon vesting. Modified in Amendments, so treated same under current law Distributions from defined benefit and state and local government plans may be withdrawn at 59 ½ without penalty. Changes to hardship distributions No wait to contribute Can withdraw earnings and employer contributions ROTH conversions of traditional IRA and vice versa repealed Senate Nonqualified deferred compensation taxed upon vesting regardless of when funds are distributed to participant. Would include stock options and SARs. Struck from bill Not addressed Not addressed Similar to House bill 60

61 Tax Reform Education House Consolidate education credits into one American Opportunity Hope Scholarship Lifetime Learning Expand it to the 5 th year at 50% Coverdell education savings account repealed Can use 529 plan dollars for K-12 up to $10k per year Discharge of student loan by reason of death or disability excluded from income Student Loan interest deduction repealed Senate Unchanged Unborn child can qualify for 529 plan Same as House bill Not addressed Tuition expense deduction - repealed Not addressed 61

62 Tax Reform Education House Interest on US Savings Bonds used to pay for college would be included in income. Exclusion from income for tuition reduction available to employees of institution, spouses or dependents repealed Employer provided education assistance up to $5,250 is excluded - repealed Senate Not addressed Not addressed Not addressed 62

63 Tax Reform Estate/Gift/GST House Increase the basic exclusion to $10 million, indexed for inflation Top rate of 40% Repeal estate and GST in 2025 Reduced gift tax rate of 35% beginning in 2025 Retain step up in basis at death Senate Increase the basic exclusion to $10 million, indexed for inflation beginning in 2011 Top rate of 40% Retain step up in basis Increased exemption sunsets 12/31/2025 Senate budget reconciliation process permanent or temporary? 63

64 64 How do we tax plan in uncertain times?

65 65 Ways to save Defer Income

66 66 Ways to save Accelerating Deductions

67 Helpful reminders 2017 filing season

68 68 Tax Return Due Dates

69 69 Tax Return Due Dates

70 70 Charitable Contribution Refreshers

71 71 Charitable Contribution Refreshers

72 72 Disaster Relief

73 73 Disaster Relief

74 74 Disaster Relief

75 Contact 75

76 Tax Reform for Nonprofits Scott LaCaze, CPA Associate Tax Director assurance - consulting - tax - technology - pncpa.com Postlethwaite & Netterville, A Professional Accounting Corporation

77 7777 Unrelated Business Income Tax (UBIT)

78 78 Exclusion of Research Income from UBIT

79 79 Excise Tax-Private Foundation Investment Income

80 80 Private Operating Foundation Art Museum

81 81 Excise Tax-Private Colleges & Universities

82 82 Private Foundation Excise Tax For Profit Business Ownership > 20%

83 83 Political Statements from Churches

84 84 Donor Advised Fund Reporting

85 Contact 85

86 Multi-State Nexus Overview Gary Dressler, CPA Associate Tax Director assurance - consulting - tax - technology - pncpa.com Postlethwaite & Netterville, A Professional Accounting Corporation

87 87 Multi-State Nexus Overview

88 88 Multi-State Nexus Overview

89 89 Multi-State Nexus Overview

90 90 Multi-State Nexus Overview

91 91 Multi-State Nexus Overview

92 92 Multi-State Nexus Overview

93 93 Multi-State Nexus Overview

94 94 Multi-State Nexus Overview

95 95 Multi-State Nexus Overview

96 96 Multi-State Nexus Overview

97 97 Multi-State Nexus Overview

98 98 Multi-State Nexus Overview

99 99 Multi-State Nexus Overview

100 100 Multi-State Nexus Overview

101 101 Multi-State Nexus Overview

102 102 Importance for Louisiana Taxpayers

103 Thank You 103

104 Lagniappe: Hot Topics for the CPA Profession of the Future Gina Rachel, CPA assurance - consulting - tax - technology - pncpa.com Postlethwaite & Netterville, A Professional Accounting Corporation

105 Accounting in extraordinary times When fast gets really fast, being slower to adapt makes you really slow and disoriented. Thomas Friedman, author of Thank You for Being Late 105

106 Technology 49% of work activities could be automated with current technology Robotics is predicted to automate or eliminate up to 40% of basic accounting work by

107 Artificial intelligence Augmented reality Robots Virtual reality Blockchain 107

108 Middle-market disruption 73% expect to experience disruption in next 3 years 79% view disruption as opportunity Source: Capital One 2017 Report: Disruption in the Middle Market an opportunity 108

109 Developing competencies Defining our future Positioning for success 109

110 110 Defining our future

111 Top 3 skills finance executives look for in auditors 67% say technology skills are needed Up 27% since % say communication skills are needed Up 25% since % say critical thinking/judgment skills are needed Up 13% since 2014 Source: KPMG and Forbes Insights, Audit 2025: The Future is Now,

112 Auditing in the Future Transform audit process Enhancing audit quality Auditing and attestation standards Secured data Data Analytics RIVIO Clearinghouse 112

113 2018 and beyond Innovating the financial statement audit and enhancing quality Estimates Risk assessment Audit evidence Data analytics Quality control Professional skepticism Emerging technologies 113

114 Cybersecurity risk management 90% of AICPA members believe their organization is prioritizing cybersecurity 88% of AICPA members say finance has been asked to take more responsibility for mitigating Cybersecurity 44% of AICPA members believe their Board or Audit Committee has asked about their cybersecurity risk management program Source: Association of International Certified Professional Accountants, Global Cybersecurity Survey, October

115 115 Developing competencies

116 5 years from now, more than a third of skills considered important today will no longer be relevant." World Economic Forum 116

117 CPA Firm hiring 20% of total new hires were non-accounting grads 117

118 118

119 119 Positioning for success

120 Impact of Technology Reporting Questioning Developing Solutions Deploying Solutions Technical skills Business skills Analytics Expert Technical Skills Problem-solving skills Change Management Negotiation Communication Influencing 120 Finance works in isolation Finance works with others

121 121

122 Think different Be Bold Move fast 122

123 Contact 123

124 A Professional Accounting Corporation