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2017 TAX CUTS AND JOBS ACT

The 2017 Tax Cuts and Jobs Act lowers corporate and individual tax rates, raises the standard deductions, increases the child tax credit and in time eliminates the individual health care mandate. The bill was created quickly and we anticipate there will be many revisions to close loopholes and /or clarify the rules.

Below is a quick summary of the new tax bill.

WHAT DID NOT CHANGE

Gambling losses

Above the line deductions

Most Employee Fringe Benefits (although the bicycle commutes has been suspended)

Dependent Care Assistance

Adoption Assistance

Identifying Shares Sold- Taxpayer still allowed to choose which shares are considered sold if they are adequately identified

Education Provisions

Home Sales Exclusion

Tax Credits

Real Estate Recovery Periods

WHAT CHANGED

PROS

Estate and Gift Tax Exclusion maintained

Standard Deductions has increased ($12,000 Individual, $18,000 Head of Household, $24,000 Married filing Jointly

Medical deduction- Allowed for 2017 and 2018 with a threshold of 7.5% then back to 10% threshold

20 percent pass through deduction for small businesses

Expanded use of 529 plan

Repeal of phase out of itemized deductions

CONS

The deduction for state and local income taxes and property taxes is capped at $10,000 . And one cannot prepay 2018 state and local income taxes

Home Mortgage Interest- limited to $750,000 of debt acquisition; $1,000,000 grandfathered for the debt acquisition prior to 12/15/2017

Bans charitable deductions in exchange for college athletic event seating

Most personal causality losses suspended

Repeals the special rule to characterized IRA contributions from Traditional to Roth or visa versa

1031 Exchange can only be used for real property

NOL carryback is generally repealed

NOL deduction is limited to 80% of taxable income

Exemptions suspended

Tier 2 Miscellaneous deductions suspended (suspended employed business expenses, tax preparation fees, investment expenses)

Moving deductions suspended

Entertainment deduction disallowed