N/A. Kiddie Tax Various bracket thresholds Ordinary and capital gains rates applicable to trusts and estates

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1 We have prepared a summary of the House and the Senate versions of the proposed tax reform bill. Once they reach an agreement on a final bill, we will update the summary as needed. House Bill (H. R. 1) Individual Tax Reform* Individual Tax Brackets 12%, 25%, 35% and 39.6% 10%, 12%, 22%, 24%, 32%, 35% and 38.5% Bracket thresholds The 25% bracket would begin at: $90,000 for joint returns/surviving spouses, $67,500 for heads of household, half of the joint amount for any other individuals (i.e., $45,000), and $2,550 for an estate or trust. (Income under this amount would be subject to the 12% rate.) (Act. Sec. 1001(b)(1)). The 35% bracket would begin at: $260,000 for joint returns/surviving spouses, half of the joint amount for a married individual filing separately (i.e., $130,000), $200,000 for any other individuals, and $9,150 for an estate or trust. (Act Sec. 1001(b)(2)). The 39.6% bracket would begin at: $1 million for joint returns/surviving spouses, half of the joint amount for any other individual (i.e., $500,000), and $12,500 for an estate or trust. (Act Sec. 1001(b)(3)). In addition, the Act would provide for a phaseout of the 12% rate under which, as described in the Sectionby Section summary, the benefit of the 12% rate is phased out for taxpayers with AGI over $1 million ($1.2 million for joint filers). (Act Sec. 1001(e)) For 2018, the 12% bracket would begin at: $9,525 for single individuals and married individuals filing separately, $13,600 for heads of household, and $19,050 for joint returns/surviving spouses. (Income under this amount would be subject to the 10% rate.) The 22% bracket would begin at: $38,700 for single individuals and married individuals filing separately, $51,800 for heads of household, $77,400 for joint returns/surviving spouses. The 24% bracket would begin at: $70,000 for single individuals, married individuals filing separately, and heads of household; and $140,000 for joint returns/surviving spouses. The 32% bracket would begin at: $160,000 for single individuals, married individuals filing separately, and heads of household; and $320,000 for joint returns/surviving spouses. The 35% bracket would begin at: $200,000 for single individuals, married individuals filing separately, and heads of household; and $400,000 for joint returns/surviving spouses. The 38.5% bracket would begin at: $500,000 for single individuals, heads of household, and married individuals filing separately; and $1 million for joint returns/surviving spouses. Reduced Rate for Small Businesses with Net Active Business Income 9% tax rate, in lieu of the ordinary 12% tax rate, for the first $75,000 in net taxable income of an active business owner or shareholder earning less than $150,000 in taxable income through a pass through business. For unmarried individuals, the $75,000 and $150,000 amounts are $37,500 and $75,000, and for heads of household, those amounts are $56,250 and $112,500. As taxable income exceeds $150,000, the benefit of 9% rate relative to the 12% rate is reduced and it is fully phased out at $225,000. Businesses of all types are eligible for the 9% tax rate. Trust & Estates Tax Brackets 12%, 25%, 35% and 39.6% 10%, 24%, 35% and 38.5% Kiddie Tax Various bracket thresholds Ordinary and capital gains rates applicable to trusts and estates Capital Gains 0%, 15% and 20% with breakpoints indexed using chained CPI 0%, 15% and 20% with breakpoints indexed using chained CPI

2 Certain Pass Through Income House Bill (H. R. 1) 25% "business income" tax rate to "qualified business income." Election to apply a capital percentage (defined as 30%) to the net business income from active businesses to determine their business income eligible for the 25% rate, with the remaining 70% subject to ordinary income rates, or elect formula based on facts and circumstances to determine greater than 30%. Personal service business not eligible for the 25% business income rate. Deduction of 23% of domestic qualified business income from a partnership, S Corp or sole prop subject to limitations based on wages. Specified personal service businesses are eligible for the 23% deduction subject to limitations. Loss Limitations for Non Corporate Taxpayers Excess business losses ($500,000 for MFJ and $250,000 for Single) would be carried forward and treated as an NOL in subsequent tax years. Child Tax Credit Nonrefundable Credits $1,600 (currently $1,000) and begins to phase out at $115,000 for single filers and $230,000 for MFJ filers (currently $75,000 for single filers and $110,000 for MJF) Repeal credit for over 65 or retired on disability, mortgage credit certificates and credit for plug in electric drive motor vehicles $2,000 (currently $1,000) and begins to phase out at $500,000 (currently $75,000 for single filers and $110,000 for MJF) Higher Education Credits One "enhanced" American Opportunity Tax Credit, $2,500 maximum 529 Distributions Up to $10k per year for elementary and high school expenses as "qualified expenses" and parents can set up for unborn children Distributions could be used for public, private and religious elementary and secondary schools, as well as home schooled students Education Provisions Repealed interest payments on student loans, above the line deduction for tuition and expenses, exclusion from income of interest on US Savings Bonds used to pay higher education expense, exclusion from gross income of qualified tuition reductions and employer provided education assistance Standard Deduction $24,400 MFJ, $18,300 for HOH and $12,200 for Single $24,000 MFJ, $18,000 for HOH and $12,000 for Single Personal Exemption Repealed Repealed Itemized Deductions Mortgage interest deduction retained but deduction limited to new home purchases up to $500,000. Limit taxpayers to one qualified residence. Repeal deduction for personal casualty and theft losses, except for loss incurred in a Presidentially declared disaster Repeal deduction for tax preparation expenses Repeal moving expenses Repeal the overall limitation on itemized deductions Repealed unreimbursed employee expenses Repeal deduction for interest on home equity indebtedness. Current law for interest on acquisition indebtedness would remain intact Repeal deduction for personal casualty and theft losses, except for loss incurred in a Presidentially declared disaster Repeal deduction for tax preparation expenses Repeal all miscellaneous itemized deductions subject to the 2% floor Repeal the overall limitation on itemized deductions

3 Alimony Deduction Repealed State and Local Income Tax Deduction Repealed Repealed Property Tax Deduction Limited to $10,000 Limited to $10,000 Charitable Contributions Increase 50% limitation to 60% under Code Sec 170(b) for cash contributions, repeal charitable mileage deduction and other repeals Increase 50% limitation to 60% under Code Sec 170(b) for cash contributions Medical Deductions Repealed Keeps deduction and reduces AGI limit to 7.5% for 2017 and 2018 Gain from Sale of Principal Residence Current law Income Exclusions Own and use as home for 5 out of the previous 8 years (current law is 2 out of the previous 5 years) and only be used once every 5 years and phased out at higher income Repeal dependent care assistance programs, qualified moving reimbursement, adoption assistance programs and employee achievement awards Own and use as home for 5 out of the previous 8 years (current law is 2 out of the previous 5 years) and only be used once every 5 years Gambling Loss Limitation Savings, Pensions and Retirement Estate, Gift & GST Tax All deductions for expenses incurred in carrying out wagering transactions, not just gambling losses, would be limited to the extent of gambling winnings Repeal current law provisions under which an individual may re characterize a contribution to a traditional IRA as a contribution to a Roth IRA and may also recharacterize a conversion of a traditional IRA to a Roth IRA. Modification of nondiscrimination rules. Double current exemption from $5 million to $10 million (indexed for inflation). Estate and GST taxes repealed after 2024 All deductions for expenses incurred in carrying out wagering transactions, not just gambling losses, would be limited to the extent of gambling winnings Double current exemption from $5 million to $10 million (indexed for inflation) AMT Repealed Revised for individuals and corporations ACA Restricted Stock Units Restricted stock units not eligible for Code Sec 83 treatment except as provided in new code Sec 83(i) Repeals individual mandate which imposes penalty on taxpayers who don't have insurance Deduction for Educator Expenses Repealed Increase from $250 to $500 Expiration Most provisions permanent Most provisions permanent for corporations however, many of the individual provisions would expire at the end of 2025.

4 Business Tax Reform* Corporate Tax Rate Flat 20% starting in 2018, Personal Service Corporations flat 25% Flat 20% starting in Eliminate Personal Service Corporations special tax rate of 35% Dividend Received Deduction Reduce 70% DRD to 50% and the 80% DRD to 65% Reduce 70% DRD to 50% and the 80% DRD to 65% AMT Repealed Revised 179 Expensing Increased to $5 million and phase out increased to $20 million after 2017 and before Increase to $1 million from $500,000 and phase out increased to $2.5 million from $2 million. Qualified real property definition expanded to include roofs, heating, ventilation and airconditioning property, fire protection and alarm systems and security systems Accounting Methods Cash method expanded for businesses with an annual average gross receipts less than $25 million and the requirement that such businesses satisfy the requirement for all prior years would be repealed. Cash method expanded for businesses with an annual average gross receipts less than $15 million. Would retain exceptions for certain PSCs and taxpayers other than C Corps allowing the use of the Cash method regardless of the $15 million gross receipts test so long as the use of such method clearly reflects income. Inventory Accounting Rules Businesses with average gross receipts of $25 million or less would be permitted to use the cash method of accounting even if the business has inventory. Under the Act, businesses with average gross receipts of $25 million or less exempt from UNICAP rules. Exempt certain taxpayers from the requirement to keep inventory but rather allowed to use a method of accounting that either 1) treats inventory as non incidental materials and supplies or 2) conforms to the taxpayer's financial accounting treatment. Percentage of Completion Method The $10 million average gross receipts exception would be increased to $25 million. Expand exception for contracts of real property if 1) expected completion is within 2 years and 2) performed by a taxpayer who meets the $15 million gross receipts test. Business Interest Deduction Disallowance of a deduction for net interest expense in excess of 30% of the business's adjusted taxable income. Disallowed amounts carried forward 5 years. Limited to the sum of business interest income plus 30% of the adjusted taxable income of the taxpayer. Disallowed amounts carried forward indefinitely. Cost Recovery Deduction Immediately expense 100% of the cost of qualified property acquired and placed in service after Sept and before Jan Property would be eligible for this immediate expensing if it is the taxpayer's first use, repealing the current requirement that the original use of the property begin with the taxpayer. First year depreciation deduction increased to 100% for property placed in service after Sept and before Jan 1, For luxury autos and other listed property for which first year depreciation deduction is not claimed, maximum amount of allowable depreciation would be $10,000 for year placed in service, $16,000 for the second year, $9,600 for the third year and $5,760 for the fourth and later years in the recovery period. NOL Deduction Limit the NOL deduction to 90% of taxable income. Repeal carrybacks with exceptions. Limit the NOL deduction to 80% of taxable income.

5 Like kind Exchanges Modified to allow for like kind exchanges only with respect to real property Modified to allow for like kind exchanges only with respect to real property Recovery Period for Real Property Shorten the ADS recovery period for residential real property from 40 years to 30 years and non residential real property to 25 years for all property placed in service after Dec. 31, 2017 Domestic Production Activities Deduction Repealed Repealed Fringe Benefits No deduction would be allowed for entertainment, amusement or recreation activities, facilities, or membership dues relating to such activities or other social purposes. In addition, no deduction for transportation fringe benefits, benefits in the form of onpremises gyms and other athletic facilities, or for amenities provided to an employee that are primarily personal in nature and that involve property or services not directly related to the employer's trade or business, except to the extent such benefits are treated as taxable compensation to the employee. The 50% limitation would only apply for food or beverages and to qualifying business meals with no deduction allowed for other entertainment expenses. No deduction for 1) any activity generally considered to be entertainment, amusement or recreation, 2) membership dues with respect to any club organized for business, pleasure, recreation or other social purposes, and 3) a facility or portion thereof used in connection with any of the above items. Disallow expenses associated with meals provided for the convenience of the employer on the employer's business premises, or provided on or near the employer's business premises through an employer operated facility (beginning after Dec 31, 2025). Would also disallow qualified transportation fringe to employees and except as necessary for ensuring the safety of an employee, any expense incurred for providing transportation for commuting between the employee's residence and place of employment. Partnership Law Changes Repeal rule on technical terminations Sale or exchange of partnership interest by a foreign person Built in loss definition modified Retirement Savings Changes Single aggregate limit to contributions for 457(b) plans, 401(k) plans and 403(b) plans. 457(b) plans would be coordinated with the limit for 401(k) and 403(b) plans. Repeal catch up contributions under 403(b) and 457(b) plans such that the same limits would apply to elective deferrals and catch up contributions under 401(k) Employer paid Family and Medical Leave General business credit equal to 12.5% of the amount of wages paid to qualifying employees during any period in which such employees are on family and medical leave (FMLA) if the rate of payment is 50% of the wages normally paid to an employee, increased by.25, but not above 25%, for each percentage point above 50%. Research and Experimentation (R&E) Expenses Amounts paid or incurred in tax years beginning after Dec , capitalized and amortized ratably over a five year period, 15 years in outside the US, beginning with the midpoint of the tax year in which the specified R&E expenses were paid or incurred.

6 Tax incentives for investment in qualified opportunity zones Self created Patents Character of gain treated as ordinary income, no longer capital gains. Repeal the special rule treating the transfer of a patent prior to its commercial exploitation as long term capital gain, effective for dispositions after 2017 Deferral of inclusion in gross income for capital gains Other Business Provisions Repeal the rollover of publicly traded securities gains into specialized small business investment companies, effective for sales after Repeal deduction for local lobbying expenses. Repeal employer provided child care credit Repeal credit for clinical testing expenses for certain drugs for rare diseases Repeal work opportunity credit Repeal the new markets tax credit Repeal credit for expenditures to provide access to disabled individuals Repeal rehabilitation credit. *This information is not intended to encompass all aspects of the proposed changes and could be subject to limitations not described in the outline. Details for this topic not provided. Revised 12/7/2017