What you should know about the new tax law Part 3: Business

THE business tax provisions of the Tax Cut and Jobs Act include:

• The new Tax Cuts and Jobs Act cuts corporate taxes from eight graduated rates of 15 percent to 35 percent to a flat rate of 21 percent.

• Introduces a 20 percent deduction for pass-through entities.

• Uses a new territorial system of taxation instead of the current tax on worldwide income of multinational corporations.

• Requires companies to pay a one-time, low tax rate on their existing overseas profits at 15.5 percent on cash assets and 8 percent on non-cash assets.

• Preserves the current tax treatment of nonqualified deferred compensation.

• Expands the number of taxpayers who may use the cash method of accounting.

• Retains the business interest expense deduction for small businesses.

• Simplifies the inventory rules for small businesses.

• Expands the exception for small businesses from the uniform capitalization rules.

• Removes computer or peripheral equipment from the definition of listed property.

• Provides consideration of an inflation index.

• Allows nonresident aliens as qualifying beneficiaries of an electing small business trust.

• Repeals the technical terminations rule for partnerships.

• Prohibits businesses from writing off sexual harassment settlements.

• Limits executive pay at nonprofits with a new levy of 21 percent excise tax on salaries above $1 million.

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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California. 

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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies.  He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at vicsy@live.com.


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