![]() ![]() Election pundits suggest we may see a flip in the Senate from Republican to Democrat, placing Senator Wyden as chairman of the committee. The pooling proposal from minority leader of the Senate Finance Committee, Senator Ron Wyden (D-OR), is another draft proposal worthy of continual monitoring. If land is not eligible for immediate expensing, then 1031s must remain the vehicle to defer gain recognition and encourage subsequent investment.Absent 1031s, per the independent studies regarding repeal of 1031s, a contraction may occur in GDP due to the lock-in effect if assets’ sales trigger gains and there is no means of deferral. Not all assets may fall into 100% expensing categories.Like-kind exchanges must be the vehicle to defer gain recognition at the state level. Not all states may recognize 100% expensing for state tax purposes.Depending on a company’s tax situations, immediate write-offs for tax purposes may not provide the flexibility needed to achieve company goals. Not all companies would choose 100% expensing.During our meetings, we made very strong points as to why 1031 like-kind exchanges need to remain intact, should this bill move forward. Potential elimination of 1031 like-kind exchanges: Ways & Means senior staff indicated that while the elimination of like-kind exchanges is not currently drafted, it is still up for consideration as offset to cover the plan. For our clients whose business model requires a higher debt-to-equity ratio, such a measure would make supporting growth initiatives or even maintaining current operations difficult. No interest deductibility: 100% immediate expensing is costly, so the funds for the blueprint would come partially come from eliminating interest deductions on debt. There are also indications of further exclusions for certain classes of assets, but details are still unavailable. ![]() ![]() Also, excluding land could prove problematic when it comes to maintaining a reasonable debt-to-equity ratio when funding projects up front. Excluding land may cause complications when allocating cost between land and buildings. But there are areas that the blueprint does not yet specify.Įligibility for new and used assets: Though the House Ways & Means Committee is currently silent, comments from senior staff indicate a preference to include all assets, new and used, except land. The idea dates back to the 1980s, and more recently we have seen bonus depreciation as a widely accepted form of this. I’d like to highlight several points in the draft House Blueprint that could impact your business:Īccelerating write-offs of capital assets is not a new expansion method and is still very popular. House Ways & Means Draft Blueprint for Tax ReformĮarlier this year, House Ways & Means Chairman Kevin Brady, (R-TX) introduced the draft blueprint for comments and, learning from the experiences of past Chairman Dave Camp, is soliciting input on the blueprint from members of Congress, the business community, and other interested groups prior to voting out of committee. As part of Accruit’s continued advocacy efforts on behalf of our real estate and personal property LKE clients and as co-chair of the Federation of Exchange Accommodators Government Affairs Committee, I’ve made six trips to Capitol Hill this year to meet with congressional staff, specifically targeting members of the House Ways & Means Committee and Senate Finance Committee, both of which determine U.S. While congressmen and women are out campaigning, congressional staff continue to work in the area of tax reform. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |