| Buzzwords |
Effects on Business Taxes |
| Alternative minimum tax (AMT) |
Repeals AMT for corporations. |
| Bonus depreciation |
Significantly expands first-year deductions but only temporarily. |
| Cash-basis accounting |
Increases the annual gross-receipts threshold for eligibility to use this simplified reporting method. |
| Corporate tax rate |
Installs a flat 21% tax rate that also applies to personal service corporations. |
| Cost segregation studies |
Changes to the depreciation rules and recovery periods; may warrant a study to reclassify certain costs, thereby accelerating deductions. |
| Domestic production activities deduction (DPAD) |
Eliminates this break, also known as the manufacturers' deduction under Sec. 199. |
Entertainment deductions
|
Reduces or eliminates tax breaks for business entertainment. |
| Entity choice |
Introduces new considerations when deciding on business structure; applies 1) temporary changes for 2018 through 2025 to owners of pass-through entities and 2) permanent changes to C corporations. |
| Family and medical leave programs |
Provides a new credit for employers. |
| Foreign operations |
Provides tax incentives to repatriate foreign income and conduct operations in the United States. |
| Fringe benefits |
Eliminates deductions for the cost of providing certain transportation-related employee benefits. |
| Interest expense deductions |
Repeals the earnings stripping rules; provides new limits on interest expense deductions, with several exceptions. |
| Like-kind exchanges |
Eliminates Sec. 1031 like-kind exchanges for exchanges of personal property; retains Sec. 1031 for exchanges of real estate. |
| Loan balances for departing employees |
Introduces new rules for employees with outstanding 401(k) loan balances. |
| Long-term construction contracts |
Expands the exception from the requirement to use the percentage-of-completion (PCM) method to report income from long-term construction contracts. |
| Meal expenses |
Allows 50% deductions for on-premises cafeterias and meals provided for the convenience of employers for 2018 through 2025; eliminate these deductions after 2025. |
| Moving expenses |
Requires employers to include job-related moving expense reimbursements as taxable income on employees' W-2s (except for active-duty members of the military) for 2018 through 2025. |
| Net operating loss (NOL) deductions |
Imposes new limits; disallows NOL carrybacks but allows indefinite NOL carryforwards. |
| Owners' compensation |
May affect pass-through income deduction for qualified business income (below). |
| Pass-through income deduction for qualified business income (QBI) |
Creates a new deduction for sole proprietorships, limited liability companies (LLCs), partnerships, and S corporations that are subject to numerous restrictions and available only from 2018 through 2025. |
| Recovery periods |
Reduces the recovery periods for qualified improvement property; simplifies the rules. |
| Research costs |
Requires specified research or experimental expenditures to be capitalized and amortized rather than currently deducted; goes into effect in 2022. |
| Section 179 expensing |
Permanently liberalizes the Sec. 179 first-year depreciation rules. |
| Share-based payments |
Allows qualified employees who exercise these instruments to defer related income for up to five years; may encourage private companies to issue these awards and employees to exercise them. |
| Uniform capitalization (UNICAP) |
Expands the exception for small taxpayers from the requirement to follow the complicated UNICAP rules for inventory accounting. |
| Vehicle deductions |
Makes temporary and permanent favorable changes to depreciation rules for vehicles used more than 50% for business. |
