Client Alert: Tax Planning This Election Year07/22/2020
The Tax Cuts and Jobs Act of 2017 (the 2017 Tax Act) effected a number of tax changes that benefitted high-net-worth individuals and businesses.
The changes that benefitted high net worth individuals include:
· lowering the income tax rates
· increasing the standard deduction
· reducing the alternative minimum tax
· allowing capital gains to be rolled over into qualified opportunity zone funds; and
· nearly doubling the estate and gift tax exemption.
The changes that benefitted businesses include:
· a steep drop in the corporate tax rate
· changing the U.S. from a global to a territorial tax system
· eliminating the corporate alternative minimum tax
· providing a large new tax deduction for the owners of pass-thru entities
· doubling the maximum amount of Section 179 property that may be expensed in the year the property is placed in service, increasing the related phase-out amount and expanding the types of assets that qualify as Section 179 property
· doubling the amount of bonus depreciation for qualified investment property; and
· reducing the recovery period for residential rental property.
With the upcoming Presidential and other elections this November, which could deliver control of the White House and the Senate to the Democrats, a number of observers have expressed concern that many of the foregoing benefits, as well as benefits that were in effect prior to enactment of the 2017 Tax Act, may be repealed.
For this reason, and because asset values are expected to increase as the recession winds down, there are a number of steps high net worth taxpayers might consider in order to take advantage of these endangered benefits. These steps include triggering income and gain this year, accelerating asset acquisitions and like-kind exchanges, restructuring foreign and domestic business operations, and gift giving.
Our Tax and Trusts and Estates Departments are available to assist you with your planning.