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8/8/2019

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What We Learned from Tax Reform for Individuals

August 8, 2019

› Individuals

• Participate in entire webinar

• Answer polls when they are provided

› Groups• Group leader is the person who registered & logged on to the webinar• Answer polls when they are provided• Complete group attendance form • Group leader sign bottom of form• Submit group attendance form to [email protected] within 24 hours of webinar

› If all eligibility requirements are met, each participant will be emailed their CPE certificate within 15 business days of webinar

To Receive CPE Credit

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Your Presenters

Susan Jones, JD

› Partner› Private Client Services & BKD Family Office› St. Louis, Missouri› [email protected]› 314.236.5221

Your Presenters

Jeff Bodkin, CPA

› Managing Director› Private Client Services & BKD Family Office› Indianapolis, Indiana› [email protected]› 317.383.4140

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Your Presenters

Derek Smith, CPA

› Partner› Construction & Real Estate› Springfield, Missouri› [email protected]› 417.334.5165

Damien Martin, CPA

› Director› Private Client Services, BKD Family Office

& BKDnext

› Chicago, Illinois› [email protected]› 312.270.2529

Your Moderator

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Overview of What Changed for Individuals

Reduced Individual Income Tax Rates

*Plus 3.8 percent net investment income tax on unearned income when modified adjusted gross income exceeds $200,000 ($250,000)

Expires after December 31, 2025

Single Ordinary Rates

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› New IRC Section 199A provides 20 percent deduction of domestic qualified business income (QBI) for individuals, trusts & estates for 2018–2025 tax years

› When taxable income exceeds $160,700 ($321,400 for joint filers or surviving spouse) in 2019, limitations partially apply until taxable income reaches $210,700 ($421,400)

• W-2 wages

• Qualified property

• Specified service trade or business

Created New 20 Percent Deduction


› Additional resources available at bkd.com/taxreform

• “Pass-Through Business Deduction” flowchart• “The Qualified Business Income Deduction Under

the Tax Cuts and Jobs Act” white paper• “Simply Tax” podcast

› Episode 54: “Putting the §199A Pieces Together"• Webinars

› "The QBI Deduction: Insights on the Latest Guidance"

Created New 20 Percent Deduction


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› Temporarily increased individual alternative minimum tax (AMT) exemption. Amounts for 2019

• $71,700 for single filers (other than surviving spouses)• $111,700 for joint filers or surviving spouses• $55,850 married filing separate• $25,000 estate & trusts

› Temporarily increased phase-out threshold to begin at $510,300 for single filers & married filing separate ($1,020,600 joint filers; $83,500 for estates & trusts)

Increased AMT Exemption & Phaseout


Increased Standard Deduction


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› Medical & dental expense

• Limited to extent amounts exceed 7.5 percent of adjusted gross income (AGI) for 2017 & 2018 tax years; 10 percent of AGI for 2019–2025

› State & local income tax

• Capped combined deduction for amounts not paid or accrued in a trade or business to $10,000 ($5,000 MFJ)

Curtailed Itemized Deductions


› Home mortgage interest expense

• Limited to interest paid or incurred to that attributable to first $750,000 of acquisition indebtedness incurred after December 15, 2017

• Eliminated deduction for interest paid/incurred on home equity loans (except where proceeds are used for home acquisition/improvement)



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› Gifts to charity

• Increased limitation for cash contributed to 50 percent organizations to 60 percent of contribution base

• Repealed 80 percent deduction of amount paid to colleges for right to purchase tickets for athletic events after December 31, 2017

› Miscellaneous itemized deductions

• Repealed deduction for amounts subject to the 2 percent of AGI floor



› CTC temporarily increased to a nonindexed $2,000 ($1,400 refundable) per qualifying child

› $500 nonrefundable credit for each dependent who isn’t a qualifying child

› Increased credit’s phase-out threshold to begin at $200,000 for single filers ($400,000 married filing joint)

Enhanced Child Tax Credit (CTC)


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Net Operating Loss (NOL)

› Modified NOL deduction

› Limits deduction to 80 percent of taxable income for losses arising in tax years beginning after December 31, 2017

› May generally not be carried back

› Carried forward indefinitely

Excess Business Loss Limitation

› Limits aggregate deductions attributable to trades or businesses over the aggregate gross income/gain to $255,000 for single filers ($510,000 MFJ) in 2019

› Any excess losses treated as an NOL

Modified & Added Loss Limitations


› Qualified opportunity (QO)

• Zones: low-income census tracts identified by stats

• Fund: corporation or partnership that invests in QO zone property

› Businesses with substantially all tangible property owned or leased in QO zone

› Cannot be golf course, country club, gaming, etc.

Added Qualified Opportunity Zones

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Temporary Deferral of Gain

› 180-day reinvestment of gain directly in fund

› Deferral ends on earlier of date of next sale, or 2026

› Percentage of deferred gain recognized depends on length of holding period• < 5 years: 100 percent

• > 5 but < 7 years: 90 percent

• > 7 years: 85 percent

Added Qualified Opportunity Zones

Doubled Lifetime Exemption

Previous Law New Law

Estate tax 40 percent rate with $5.6million basic exclusion amount per taxpayer

40 percent rate with $11.4million basic exclusion amount per taxpayer in 2019

Gift tax 40 percent rate with $5.6 million basic exclusion amount per taxpayer; $15,000 annual exclusion

40 percent rate with $11.4 million basic exclusion amount per taxpayer in 2019; $15,000 annual exclusion

Generation-skipping transfer tax

40 percent rate with $5.6 million basic exclusion amount per taxpayer

40 percent rate with $11.4 million basic exclusion amount per taxpayer in 2019


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General Questions from Individual Taxpayers

General Questions from Individuals

How did the TCJA affect the “marriage penalty?”

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What effect does tax reform have on the kiddie tax rates

& are there exceptions?



Is there a way to expense unreimbursed business

expenses without itemizing deductions after the TCJA?

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What was the average refund for individuals?

Charitable Giving

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Charitable Giving After Tax Reform

How did the TCJA change the charitable giving

landscape?


What trends have you seen related to charitable giving with the 2018 tax returns

you’ve filed so far?

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What are the planning strategies for charitable

giving after tax reform & are they actually being

implemented?

Estate & Gift Planning

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Estate Planning After Tax Reform

How did the TCJA change the landscape for estate &

gift planning?


What happens when the increased lifetime exemption

amount expires?

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Is it a good idea to wait to see what happens with the exemption amount or to go ahead & implement a plan

now?


What are some of the planning ideas you are

seeing put into action after the TCJA?

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Qualified Opportunity Zones

Qualified Opportunity Zones (QOZs)

What is the goal with QOZs & are QOZs working so far?

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What were the key questions/issues addressed

in the two rounds of proposed guidance & is it

enough to allow investment to begin?


Who is a good candidate for a QOZ?

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Are you seeing much activity with QOZs?

Other TCJA Provisions

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Interplay with Other TCJA Provisions

Do wages count for purposes of the excess

business loss limitation?


What observations or trends have you seen from applying

the QBI deduction so far?

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What did you learn from applying IRC §163(j) in

practice this tax season?

What’s Next?

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What’s Next After the TCJA

What’s the outlook for future tax legislation & remaining

guidance?


What has been the most significant unanticipated

effect of the TCJA?

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What’s the biggest thing you’ve learned from the 2018 tax year that we can apply in

2019?

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Continuing Professional Education (CPE) Credit

BKD, LLP is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org

› CPE credit may be awarded upon verification of participant attendance

› For questions, concerns or comments regarding CPE credit, please email the BKD Learning & Development Department at [email protected]

CPE Credit

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bkd.com | @BKDLLP

The information contained in these slides is presented by professionals for your information only & is not to be considered as legal advice. Applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor or legal counsel before acting on any matters covered

to receive cpe credit - bkd

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