Without much fanfare but with typical political controversy, the House and Senate successfully reconciled their respective tax bills. House and Senate conference committee members leaned in favor of many provisions contained in the Senate proposal. A significant move in that direction was retaining the elimination of the Affordable Care Act’s individual mandate (the penalty for failing to maintain minimum essential health care coverage) and using the Senate’s methodologies for taxing income from pass‐through businesses (but some elements of the House bill entered into the computation). In other circumstances, a true compromise was reached, such as meeting in the middle on modifications to mortgage interest deductibility. Following the political maneuvering, the new tax legislation (the “Act”), has now been approved by Congress and signed into law by President Trump on December 22.
In order to abide by Senate budget reconciliation rules and ensure the Act does not result in budget deficits outside the 10‐year budget window, the Act makes almost all individual income tax provisions temporary — nearly all expire at the end of 2025. No doubt, this will create tax complexity and political difficulties. On the other hand, most corporate provisions are permanent. This Tax Bulletin 2017‐9 summarizes certain provisions of the Act and adds observations on income, estate and pass‐through taxation.1 Taxpayers may want to consider the implications of typical year‐end decisions, such as selling capital assets and charitable giving, in light of the changes noted below, and discuss their particular circumstances with their tax advisors before taking action.
Read the report in its entirety courtesy of Merrill Lynch: Merrill Lynch Tax Bulletin 2017