THE PRESENT TAX LANDSCAPE: IMPLICATIONS FOR INDIVIDUALS, BUSINESSES, INVESTORS, AND OTHERS. Roger A. McEowen and Lori A. McMillan

Transcription

1 THE PRESENT TAX LANDSCAPE: IMPLICATIONS FOR INDIVIDUALS, BUSINESSES, INVESTORS, AND OTHERS Roger A. McEowen and Lori A. McMillan

2 CONTACT INFORMATION Roger A. McEowen Kansas Farm Bureau Professor of Agricultural Law and Taxation Washburn University School of Law Website: washburnlaw.edu/waltr Lori A. McMillan Professor of Law Washburn University School of Law

3 Cost CBO and the staff of the Joint Committee on Taxation determined that provisions in the Conference Agreement would increase deficits over the period by $1.5 trillion (not including any macroeconomic effects). By CBO s estimate, additional debt service would boost the 10-year increase in deficits to $1.8 trillion. As a result of those higher deficits, debt held by the public would increase from the 91.2 percent of gross domestic product in CBO s June 2017 baseline to 97.5 percent. (emphasis added)

4 Benefits 4

5 Distributional Impact 5

6 Rates - Single 6

7 Rates - MJF 7

8 8

9 Pease Limitation A phaseout of itemized deductions based on income: 3% once TP hits AGI of S$261,500/MFJ$313,800 (2017) Removed Essentially an additional tax cut for higher income earners, because it was effectively a 1-1.2% surtax on high income earners. Sunsets after 2025 so still have to know about it in case temporary actually means temporary. 9

10 10

11 Estates and Trusts 11

12 Kiddie Tax Old: Children (under 19/F-T students under 24) taxed at their individual tax brackets for earned income, but unearned income above threshold ( $2,100) added to parent s income at their top marginal rates New: Child s unearned income is subject to trust tax brackets which hits 37% at the low threshold of $12,

13 Capital Gains 13

14 Standard Deduction Old: S $6,500 HoH $9,550 MFJ $13,000 New: S $12,000 HoH $18,000 MFJ $24,000 Starting in 2019, will be adjusted for inflation* Sunsets in

15 Exemptions Old: 2017: $4,050 per person in family, pursuant to 151 New: Eliminated (actually suspended) Elimination will sunset after

16 Standard Deduction with Personal Exemptions 16

17 Adjustments for Inflation Old: CPI New: Chained CPI Affects, for example, rate brackets, standard deduction, earned income tax credit, alternate minimum tax. Reduced the inflation increases in inflation-adjusted provisions. Child tax credit and personal exemption were both indexed for inflation (not now latter suspended, for now, while the former is now not indexed) Over 10 years est. effect will be around 3 percentage points so is an indirect tax increase. 17

18 Credit vs. Deduction Refresher Deduction reduces taxable income Value based on tax that would have been paid on the amount that was deduction ie. Income $1,000, tax rate 30%, $100 deduction is worth $30 in real savings. Credit reduces tax payable Value is dollar for dollar reduction of tax. If I owe $100 in tax, and I have a $30 tax credit, my new tax liability is $70. Refundable vs. non-refundable 18

19 Child Tax Credit Old: $1,000 per child under 17 New: CTC of $2,000 per child under 17, $1,400 of that refundable Non-child dependent tax credit of $500 credit for nonchild dependents (grandparents, children over 17, etc.) Must have SSN for child to claim CTC no requirement for Non-child dependent to have. Cannot claim Dependent Tax Credit for TP using her/himself or spouse. After 2025 reverts to old provisions (lower CTC, no nonchild dependent credit) 19

20 Child Tax Credit, continued Income phaseouts are dramatically increased Old: S$75,000/MFJ$110,000 New: S$200,000/MFJ$400,000 Thresholds NOT indexed for inflation 20

21 Miscellaneous Itemized Deductions Mortgage Interest Old: could deduct mortgage interest from first $1M of home debt New: can deduct mortgage interest from first $750,000 of home debt. Only applies to new mortgages taken out after Dec. 15, 2017 Grandfathering for houses under a binding written contract by Dec. 15, 2017 to close on a principal residence purchased by January 1, 2018 (and actually closed by April 1, 2018) Still applies to both a primary residence and a designated second home Home equity indebtedness no longer deductible (as opposed to acquisition indebtedness that is). No grandfathering available. State and Local Taxes Old: can deduct property and either state sales taxes or state income taxes New: limited to a combined $10,000 for property or income/sales taxes (note taxes paid or accrued in COTB not limited). $10,000 limit applies for both individuals as well as MFJ (technical amendment?) 21

22 Miscellaneous Itemized Deductions, continued Eliminated: Employee business expenses Tax preparation fees Investment interest expenses Personal casualty and theft losses except for federally declared disaster areas Modified: Charitable contributions increased to 60% by 170(b)(1)(G). Gambling losses: loss from a wagering transaction is modified, while retaining deductibility of gambling losses from gambling winnings. Medical expenses: 2017 and 2018 drops threshold to 7.5% of AGI, rather than 10%. After 2018 reverts back to 10%. 22

23 Students Student loan deductions remain the same, as does American Opportunity Credit ($2,500/yr for first 4 years of college) and Lifetime Learning credit (up to $2,000/yr). Graduate student tuition wavers are still not income 529 savings plans will cover primary and secondary schools ($10k limit), as well as college. Student loans discharged due to death or disability will not longer be treated as taxable income- 108(f)(5). (does not affect other Fed. Programs where discharge is taxable) 23

24 Above the Line Deductions Affected Eliminated: Alimony deduction for payments made under orders executed after Dec. 31, Payments under previous orders are grandfathered, and may continue to be deducted by payor/taxable to recipient. 61(a)(8) eliminated. Domestic production activities deduction (DPAD) Modified: Moving expenses now only for active military relocating pursuant to orders - 132(g)(2) (as amended). The Same (give or take): Educator expenses of $250 Student loan interest up to $2,500 Health savings account (HSA) deduction IRA deduction: except the rule permitting contributions to a non-roth IRA to be recharacterized as contributions to a Roth IRA was repealed. 408A(d)(6)(B)(iii). Deductions for self-employed taxpayers (SE tax, SE health insurance, SE qualified retirement plan contributions, etc) Principal Residence exclusion under s

25 Business Concerns 1031 Exchanges limited only to real estate Corporate AMT eliminated; Individual AMT reigned in by an increased exemption (old: S $55,400/ MFJ $86,200 new: S $70,300 and MFJ $104,900). Phaseouts are higher as well, going from s $123,100/MFJ $164,100, to S $500,000 and MFJ $1M. Employer Tax Credit for Paid FMLA Nonqualified Deferred Compensation crackdown no substantial risk of forfeiture triggers taxability. Wider range of stock options and rights now included in Qualified Equity Grant. 25

26 Business Concerns, continued Sexual Harassment Settlements ( Weinstein provision) deduction denied in connection with any settlement, payout, or attorney fees related to a sexual harassment or sexual abuse claim, if payments are subject to a NDA. Business entertainment expenses eliminated Expenses paid for entertainment activities and membership dues, and employee transportation or commuting expenses will no longer be deductible after 2017: No employer deduction for business-related entertainment (currently 50%). Expenses for meals and beverages continue to be deductible at 50% and are expanded temporarily (until 2026) to cover expenses incurred for food and beverages offered for the employer s convenience. Employee awards provided in cash or via gift cards do not qualify as an expense eligible for a deduction by the employer. 274(j)(3) has been amended to to exclude a variety of items, such as cash, most gift cards, meals, lodging, securities and similar items from the definition of tangible personal property. The 2017 tax legislation eliminates the employer deduction for any qualified transportation fringe benefit for amounts paid or incurred after December 31, (a)(4). In addition, the exclusion under 132(a)(5) for qualified bicycle commuting reimbursement is suspended for years beginning after December 31, 2017 and before (f)(8) (as amended). The 2017 legislation also provides that no deduction is allowed... for any expense incurred for providing any transportation, or any payment or reimbursement, to an employee of the taxpayer in connection with travel between the employee s residence and place of employment, except as necessary for ensuring the safety of the employee. 26

27 Immediate Expensing Businesses can immediately expense the full cost of qualified property (ie. Other than structures), including new equipment. Starts to phase down after

28 Interest Deductibility S. 167(j) is amended, net Interest expense deductions capped at 30% of Adjusted Taxable Income (ATI). The cap doesn t apply to small businesses, with average gross receipts of $25 million or less, certain regulated public utilities and real property businesses. For the first four years (ending in 2021), ATI is computed without regard to depreciation, amortization, or depletion. Thereafter (beginning in 2022), ATI is decreased by those items, thus making the computation 30% of net interest expense exceeding EBIT (earnings before interest and taxes). ATI is otherwise defined similar to current Section 163(j). Interest expense must be related to a business, which means the interest is properly allocable to a trade or business. Certain activities are excluded from being a trade or business e.g., performing services as an employee, a real property trade or business, and certain activities of regulated utilities. The provision is effective for tax years after

29 Corporate Tax Rate New: corporate flat tax of 21%, down from rates (35% in highest bracket). Old:graduated 29

30 Entity Choice Concerns 21% rate goes a long way to even the field in choosing entity form, with pass-through business entities getting a partial exclusion (discussed by Roger in next part) with remainder taxed at individual rates Given the carve out for service businesses in passthrough benefit, might provide incentive for C-corp status (or LLC with check the box as corporation) if income exceeds threshold. However, accumulated earnings tax, double tax cost of a downstream sale, payroll tax concerns all mean that there probably won t be a huge rush to C-corp status just yet. Facts and circumstances for each client. 30

31 Employee vs. Independent Contractor Big incentives to NOT be an employee Where possible, might want to consider alternate structures such an an LLC or S corp with a contract to provide services (the Bill Self gambit) rather than an employment contract, given the loss of deductions. Business employees can no longer claim a number of miscellaneous deductions for unreimbursed expenses, including a home office, union dues, licensing fees, professional organization memberships and work-related education. However, possible interpretation of s. 162, combined with judicial interpretations that employees are carrying on the business of being an employee, might enable deduction of these types of expenses under s. 162 as ordinary and necessary expenses incurred while carrying on a trade or business. Up in the air? 31

32 International Tax Changes Territorial system instead of World-Wide Income Deemed repatriation tax GILTI Base erosion anti-abuse tax Foreign-derived intangible income See next slide (chart by Susan Morse, University of Texas School of Law, but with no warranty as to completeness and accuracy)

33 [TCJA] Provision 10 Yr Revenue Estimate Description Effective date Comments 21% corporate rate, 11 ($1.35 trillion) Tyba 12/31/17 [TCJA] centerpiece Territoriality / participation exemption, 245A ($224 billion) Dividends out of foreign income from foreign corp to 10% US shs excluded Distributions after 12/31/17 Follows global trend. Deemed repatriation tax, E.g. 965 $339 billion Pay 15.5% (cash) /8% (not cash) of post 1986 accumulated E&P. Total measurement greater of 11/2/17 or 12/31/17 but cash measurement could be as of end of last tax year beginning before 12/31/18 Revenue does not recur. Cf. Camp proposal (2011). Global intangible lowtaxed income (GILTI) minimum tax, 951A $112 billion Effective 10.5% rate on GILTI, through inclusion of 50% of foreign income in excess of 10%*tangible asset basis. 80% FTC offset, pooled. Tyba 12/31/17 E.g. 10.5% of Apple offshore income. See Obama framework (2012). Base erosion anti abuse tax (BEAT), 59A $150 billion Extra 10% of related party pmts e.g. interest, royalties. For corps with gross receipts $500M plus, base erosion pmts 4% plus Tyba 12/31/17 Compare diverted profit taxes, thin cap rules in other OECD countries Foreign derived intangible income (FDII) deduction, 250 ($64 billion) Effective % rate on intangible income attributable to exports, thru 37.5% deduction Tyba 12/31/17 Export subsidy /WTO problem e.g. open letter from European finance ministers 33

34 New I.R.C. 199A 20% deduction for qualified business income Eff. for tax years beginning after 12/31/17 and before 1/1/26 The basic idea is to allow a non-corporate taxpayer to take a 20% deduction against the income from their business activity Sole proprietor S corporate owner Member of partnership Cooperative patron Owner of an interest in a REIT Owner of an interest in a qualified publicly traded partnership 34

35 I.R.C. 199A Computing the deduction It s equal to the sum of: The lesser of the combined qualified business income of the taxpayer, or 20% of the excess of taxable income over the sum of any net capital gain and qualified cooperative dividends Plus the lesser of: 20% of qualified cooperative dividends, or Taxable income less net capital gain In other words, the QBI deduction is the taxpayer s CQBI limited by taxable income 35

36 I.R.C. 199A What is combined qualified business income? (I.R.C. 199A(a)(1)) It s not really income it s a deduction It s the lesser of: 20% of the taxpayer s qualified business income from each qualified trade or business or The greater of 50% of W-2 wages with respect to the business, or 25% of the W-2 wages with respect to the business, plus 2.5% of the unadjusted basis (immediately after acquisition) of all qualified property» Note: These W-2 limitations only apply to individuals with income over $315,000 (MFJ) Plus: 20% of qualified REIT dividends; Qualified publicly traded partnership income 36

37 I.R.C. 199A Combined qualified business income deduction It s The lesser of 20% of the taxpayer s qualified business income (QBI); or The greater of 50% of the W-2 wages with respect to the business, or 25% of the W-2 wages with respect to the business plus 2.5% of the unadjusted basis of all qualified property 37

38 I.R.C. 199A Definition of QBI Ordinary income (less ordinary deductions) from the taxpayer s non-c corporate business Does not income any wages earned as an employee Note: Two people doing the same job (one as an independent contractor and one as an employee) are treated differently» Independent contractor self-employment income is QBI that is eligible for the 20% deduction» Employee wages earned are not eligible for the 20% deduction 38

39 I.R.C. 199A Definition of QBI Does not include Short-term capital gain or loss Long-term capital gain or loss Dividend income; or Interest income Also, QBI does not include Any wages or guaranteed payments received from a flow-through business Any income that s not effectively connected with the conduct of a U.S. trade or business 39

40 I.R.C. 199A The QBI deduction applies generally to business income, but It also can apply to rental income I.R.C. 199A(c)(1) The QBI must be earned in a qualified trade or business» The rental activity probably must rise to the level of a trade or business Certain rental activities may not meet the definition (such as a triple net lease where the owner has practically no regular involvement) Cash rentals Non material participation crop share/livestockshare leases 40

41 I.R.C. 199A The W-2 Limitations A taxpayer is entitled to deduct 20% of QBI up to a limit. The limit is the greater of 50% of the taxpayer s allocable share of the W-2 wages paid by the business; or 25% of the taxpayer s allocable share of the W-2 wages paid by the business, plus 2.5% of the taxpayer s allocable share of the unadjusted basis immediately after acquisition of all qualified property 41

42 I.R.C. 199A What are W-2 wages? Wages subject to withholding (I.R.C. 199A(b)(4)(C)) Wages paid to an employee, including any elective deferrals into an I.R.C. 401(k)-type vehicle or other deferred compensation. They do not include Payments to an independent contractor Management fees Wages paid in-kind 42

43 I.R.C. 199A Exception to W-2 wage limitation If taxable income for the year is less than $315,000 (MFJ) or $157,000 (everyone else) Indexed for inflation starting in 2019 Compute taxable income without factoring in any potential 20% deduction 43

44 I.R.C. 199A Phase-in of W-2 limitations I.R.C. 199A(b)(3)(B) Once taxable income exceeds the threshold, the W-2 limitations are phased-in over the next $100,000 of taxable income (MFJ) ($50,000 for everyone else) 44

45 Time For An Example Bob and Mary (MFJ) operate B&M Farms soleproprietorship. The farm earns $200,000 and pays W-2 wages of $60,000. B&M also received a co-op distribution of $2 million and its original asset cost basis is $500,000. What is their deduction? The lesser of ($200,000 - $2,000,000) x.2 = $0 ($200,000 ($0+$2,000,000) = $0 Plus the lesser of 20% x $2,000,000 = $400,000, or Taxable income less net capital gain In essence, their deduction will be taxable income less net capital gain 45

46 I.R.C. 199A I.R.C. 199A(d)(1) specifies that two types of trades or businesses are not eligible for the QBI deduction once taxable income reaches $315,000 (MFJ) (same phase-in applies) Anyone in the business of being an employee; Specified service trade or business (defined by I.R.C. 1202(e)(3)(A), except that Architects and engineers can take the QBI deduction Also eligible are businesses engaged in banking, insurance, financing, leasing, farming, any business giving rise to depletion, and any business operating a hotel, motel or restaurant 46

47 I.R.C. 199A Computing the deduction Claimed on top of page 2 of Form 1040 Thus, it won t reduce self-employment income Can be taken against AMT taxable income I.R.C. 199A(f)(2) says to determine QBI without taking into consideration any AMT adjustments or preferences as provided in Secs Thus, QBI is the same for AMT as it is for regular tax and the QBI deduction is computed the same way Because, the determination of AMTI starts with taxable income, and the amended Code provides no specific addback to AMTI for the 20% deduction, the QBI can be taken against AMT taxable income 47

48 I.R.C. 199A Computing the deduction When there is a loss in year 1 from a QBI-type activity, even if that loss is used in computing taxable income in year 1, in year 2, the QBI loss carries over and reduces year 2 QBI solely for purposes of computing the 20% of QBI deduction If there is a QBI deduction in the same year as an NOL, the deduction does not add to the NOL 48

49 I.R.C. 199A and Cooperatives The QBI deduction applies to specified agricultural or horticultural cooperatives An organization to which Part I of subchapter T applies which is engaged in Manufacturing, production, growth or extraction in whole or significant part of any ag or horticultural product; Marketing of ag or horticultural products which its patrons have manufactured, produced, grown or extracted; or Provision of supplies, equipment or services to farmers or to organizations described above 49

50 What is the Co-op s Deduction? The lesser of 20% of the co-op s excess gross income over qualified cooperative dividends (e.g., patronage dividends, per-unit retain allocations, qualified written notices of allocations, or similar amounts), or The greater of 50% of the co-op s W-2 wages, or The sum of 25% of the co-op s W-2 wages plus 2.5% of the unadjusted basis immediately after acquisition of the co-op s qualified real property Limited by the co-op s taxable income for the tax year 50

51 Co-Op Example Acme Co-op has a tax year beginning on 7/1/18. For the tax year, Acme has gross income of $400 million, qualified co-op dividends of $200 million, W-2 wages of $10 million, unadjusted basis of property of $9 million and taxable income of $3 million. Computing the deduction: Lesser of (20% x ( ) = $40 million, or Greater of: 50% x 10 = $5 million, or 25% x % x 9 = $2.725 million Deduction is $5 million limited by taxable income Deduction in $3 million 51

52 I.R.C. 199A Impact on cooperative patrons There no longer is a DPAD that can be passed-through But, for products sold to a cooperative, the deduction is 20% the total of payments received from the cooperative (including noncash qualified patronage dividends) The only limit is 100% of the net taxable income less capital gains 52

53 I.R.C. 199A Comparing the deduction For a taxpayer that is a patron of a co-op that sells to the co-op Sell to the co-op, the deduction is 20% of taxable income (tax rate.35 x.2 =.07) Don t sell to the co-op, the deduction is 20% of net farm income 53

54 Sell to Co-op or Non Co-op? Factors for consideration: Differences in price offered by the co-op as compared to the non-co-op Cost differences, such as transportation 54

55 Change in Lease Structure? Will some landlords switch from cash to cropshare to take advantage of the I.R.C. 199A deduction? Sales to a non-co-op require that the taxpayer be engaged in a trade or business to qualify for the deduction Cash rent landlord doesn t get the deduction Sales to a co-op do not require the existence of a trade or business Landlord under cash rent gets the entire deduction Landlord under crop share is entitled to the landlord s share 55

56 I.R.C. 199A Trusts and estates are eligible for the 20% deduction for tax years beginning after 2017 Rules similar to former I.R.C. 199 apply for apportioning between fiduciaries and beneficiaries any W-2 wages and unadjusted basis of qualified property under the limitation based on W-2 wages and capital. 56

57 Depreciation Changes Sec. 179 Max. is $1 million Phase-out threshold is $2.5 million Indexing after 2018 for both amounts Includes qualified real property 100% expensing ( Bonus depreciation) For assets acquired and placed in service after 9/27/17 and before 1/1/23 New and used property eligible After % for % for % for % for 2026 For first tax year ending after 9/27/17, may elect 50% allowance instead of 100% Same rules apply to plants bearing fruits and nuts 57

58 Depreciation Changes 15-yr. recovery period and straight-line depreciation for qualified improvement property for property placed in service after 2017 (20-year for ADS) 5-year recovery period for machinery or equipment (other than any grain bin, cotton ginning asset, fence, or other land improvement) used in a farming business, the original use of which commences with the taxpayer and is placed in service after December 31, The provision also repeals the required use of the 150-percent declining balance method for property used in a farming business (i.e., for 3, 5, 7, and 10-year property). The 150 percent declining balance method will continue to apply to any 15-year or 20-year property used in the farming business to which the straight-line method does not apply, or to property for which the taxpayer elects the use of the 150-percent declining balance method. For these purposes, the term farming business means a farming business as defined in I.R.C. 263A(e)(4). 58

59 Observation With 5-yr depreciation on new equipment and 7-yr depreciation on used equipment, a taxpayer could make separate bonus elections The bigger issue is that a state might not couple on bonus but might couple on the I.R.C provision not being available for equipment. 59

60 Farm Property Depreciation Where Are We Now? Farm property will be depreciated under the 200% declining balance method, except for Buildings, and trees and vines bearing nuts and fruits (to which straight-line method applies) Property for which the taxpayer elects either the straight-line method or 150% d.b. method 15 or 20-year property that has to be depreciated under the 150% d.b. method Property subject to the ADS 60

61 Capitalization Rules For replanting costs paid or incurred after date of enactment, but not later than a date that is ten years after enactment, for citrus plants lost or damaged due to casualty, the costs may also be deducted by a person other than the taxpayer if The taxpayer has an equity interest of not less than 50% in the replanted citrus plants at all times during the tax year in which the replanting costs are paid or incurred and such other person holds any part of the remaining equity interest; or Such other person acquires all of the taxpayer s equity interest in the land on which the lost or damaged citrus plants were located at the time of the loss or damage, and the replanting is on such land 61

62 Losses Non-Corporate Taxpayers For taxable years beginning after December 31, 2017 and before January 1, 2026 Limited to $500,000 (MFJ); $250,000 all others Indexed Applies at partner/shareholder level Excess disallowed is carried over and treated part of the taxpayer s NOL carryforward in subsequent years. The NOL deduction is limited the lesser of the carryover amount or 80% of taxable income (determined without regard to the NOL deduction) 2-year carryback for farm losses (no carrybacks for non-farmers) To each of the two Indefinite carryforward 62

63 Business Interest Deduction limited to business income plus 30 percent of taxpayer s AGI (computed without many adjustments) for the tax year that is not less than zero (eff. for tax years beginning after 2017) Determined at tax-filer level except for passthrough entities (entity level) If entitled to use cash accounting, no limit Avg. annual gross receipts not exceeding $25 million for three prior tax years (indexed after 2018) Farm businesses over the limit can irrevocably elect out Must then use ADS on farm property with recovery period of 10 years or more Probably won t be able to use bonus 63

64 Property Taxes Limit of $10,000 of itemized deduction for property taxes Limit inapplicable to property tax related to farm business property 64

65 Fringes Meals 50%, then nothing starting in

66 Gifting of Grain Present Law Under prior law, for a Schedule F farmer, tax savings can be significant. Eliminates the self-employment tax on the grain gifted and under the kiddie tax rules, the tax rate of the child is usually equal to the parent s tax rate. Therefore, if the farmer is under the wage base amount ($128,400 in 2018), they will save about 15% due to making the gift to their child. 66

67 Grain Gifting Impact on grain gifting: Under prior law, the child usually pays income taxes based on the parent s tax rates (there is a small amount taxed at lower rates) on unearned income. Earned income such as wages is always at the child s tax rate. New law changes the child s tax rates on unearned income to be equal to the tax rates for estates and trusts. Once the child hits $12,500 of unearned income, they will be facing a maximum tax rate of 37% on all income above this amount. This will likely make it much more costly for farm families to gift grain to their children or grandchildren and receive any tax savings. 67

68 Like-Kind Exchanges Limited to real property exchanges where the property is not held primarily for sale New rules (barring non-real estate trades) apply to exchanges completed after 2017 Old rules apply to exchanges of personal property if the taxpayer has either disposed of the relinquished property or acquired the replacement property on or before 12/31/17 68

69 Farm Program Payment Limitations An AGI limit applies $900,000 Computed by using the number shown at the bottom of page 1 of Form 1040 Used to include the DPAD of I.R.C. 199 Under the new law, I.R.C. 199 is repealed New I.R.C. 199A is not part of the AGI calculation Result could be ineligibility for payment limits The offset could be a larger deduction 69

70 Transfer Taxes Double the exemption to $11.2 million in 2018 through 2025 Indexed starting in

71 Change S to C? Lower rate? If keeping funds in corp. Tax free fringes still apply at C corp. level No I.R.C. 199A deduction 71

72 Thank You! We appreciate your attendance and will entertain questions that are submitted We will do this same seminar on January 24 While the general topic is the same, points of emphasis may change due to questions and interests of attendees Jan. 24, Noon 1:50 p.m. (CST) 72