United States

2017 year-end federal tax planning guide

INSIGHT ARTICLE  | 

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This guide reflects the tax considerations and developments that we believe may create risk or opportunity for businesses in 2017 and beyond. It is not a holistic list of all tax issues that may affect your business, but is designed to help you make informed decisions related to year-end tax planning. 

As 2017 comes to a close, some observers may feel that tax uncertainty is at an all-time high. Although there is no fiscal cliff of expiring provisions, there are substantial political pressures for Congress and the Trump administration to fulfill longstanding commitments to reform tax laws and to alter some of the tax provisions contained in the Affordable Care Act (ACA). However, there is little clarity on what would constitute tax reform even if reform could be enacted in the few months remaining in 2017. Also unclear are the possible effective dates of potential reductions to the corporate, individual and pass-through tax rates and possible limitations on individual or business deductions that might help to pay for the revenue costs associated with tax rate reduction.

If rate reductions occur in 2018 rather than 2017, there may be considerable symmetry between good planning for tax reform and good tax planning generally. For example, deferring income and accelerating deductions may be good strategies for taxpayers whose rates are headed downward, just as it is often helpful from a timing perspective, even if rates do not change.  On the other hand, if a transaction makes sense from a nontax perspective—and there are economic costs and risks associated with deferring a transaction—one should be careful not to let the tail wag the dog.

That being said, as of this writing, it appears the most likely candidates for major tax changes that might be enacted in 2017 or 2018 are:

  1. A middle-class tax break, possibly temporary
  2. Reduced tax rates for repatriated foreign earnings
  3. A possible move towards a territorial tax system for foreign corporate subsidiaries engaged in foreign business activities
  4. A corporate rate cut
  5. A rate cut for pass-through businesses that would be crafted to exclude personal services income
  6. Possible limitations on state and local tax deductions and business interest deductions to help pay for the rate cuts
  7. Changes favorable to capital cost recovery, but not as generous as full expensing for all depreciable assets In addition, the scramble for revenues at the state and local level should not be forgotten.

Given the uncertainty of the future, we’ve compiled these tax considerations designed to help companies make informed decisions related to year-end tax planning. In an increasingly complex and uncertain world, planning becomes all the more important.

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UPCOMING RSM TAX EVENTS

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Managing a changing workforce to maximize business operations

  • December 05, 2017

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RSM’s annual end-of-year summit

  • December 05, 2017

IN-PERSON EVENT

RSM’s 8th annual Richmond clients, alumni and friends CPE event

  • December 12, 2017