2017 TAX

REFORM
CRITICAL UPDATE

To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document is not intended for the purpose
of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 AGENDA

Recap on Tax Reform

Joint Conference Updates

Planning Points

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document is not intended for the purpose
of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 INDIVIDUAL CHANGES
To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document is not intended for the purpose
of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 INDIVIDUAL TAX RATES (MARRIED)
CURRENT JOINT CONFERENCE

10%
Up to $18,650 10%
Up to $19,050

15%
$18,651 - $75,900 12%
$19,051 - $77,400

25%
$75,901 - $153,100 22%
$77,401 - $165,000

28%
$153,101 - $233,350 24%
$165,001 - $315,000

33%
$233,351 - $416,700 32%
$315,001 - $400,000

35%
$416,701 - $470,700 35%
$400,001 - $600,000

39.6%
Over $470,700 37%
Over $600,000

To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document is not intended for the purpose
of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 CAPITAL GAINS RATES

CURRENT JOINT CONFERENCE

MFJ: $0 - $75,900 MFJ: $0 - $77,200
0% Single: $0 - $37,950 0% Single: $0 - $38,600

MFJ: $75,901 - $470,700 MFJ: $77,201 - $479,000

15% Single: $37,951 - $418,400 15% Single: $38,601 - $425,800

MFJ: over $470,700 MFJ: over $479,000

20% Single: over $418,400 20% Single: over $425,800

To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document is not intended for the purpose
of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 KIDDIE TAX
RULES
Earned taxable income is eligible for
lower tax rates (10%,12%, or 22%)
Max. taxable income which is taxed at a
rate below 35%
Earned taxable income, plus $9,150
(min. taxable income for 35% bracket for trusts/estates table)

Similar limitation for 37% rate

Earned taxable income, plus $12,500

To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document is not intended for the purpose
of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 PERSONAL
EXEMPTIONS
Suspended through 2025

Under current law, personal

exemptions are $4,150 for each
person (2018)

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 STANDARD
DEDUCTION
FILING STATUS CURRENT JOINT CONFERENCE

Single $ 6,350 $ 12,000

Married Filing Jointly $12,700 $ 24,000

Married Filing Separately $ 6,350 $ 12,000

Head of Household $ 9,350 $ 18,000

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 STATE &
LOCAL TAX
DEDUCTION
For 2018 through 2025, the
deduction is suspended except
for:
Real property and personal
property taxes paid or accrued
in carrying a business
$10,000 max for real property
taxes and income taxes

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 OTHER
PROVISIONS
SUSPENDED
Miscellaneous itemized
deductions
PEASE
Gambling losses limited

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 PLANNING
POINT!
Pre-Pay State Taxes
Remaining 2017 Income Tax
2018 Property Tax

(Watch out for AMT)

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 PLANNING
POINT!
Pre-Pay Future Charitable
Contributions

With Appreciated Stock

Through Donor Advised Fund
Through Private Foundation
Consider Doubling up on
Contribution

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 PLANNING
POINT!
Use a Qualified Charitable
Distribution to get full benefit of
charitable contributions.

Must be at least 70 1/2

Applies to required minimum
distribution (RMD)

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 EDUCATION
PROVISIONS
Retains current law

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 OTHER
EDUCATION
PROVISIONS
Student loans discharged on
account of death/disability are
excluded from income
529 Plans available for K-12
schools and home-schooling
Applies for tax years 2018-2025

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 MEDICAL EXPENSE
DEDUCTION
7.5% floor applies for all taxpayers
(2017 & 2018)
10% floor (2019 and after)

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 ALIMONY
Deduction and income inclusion
repealed

Effective for agreements executed

after December 31, 2018

Effective for agreements executed

before 12/31/18 and modified after
that date, if the modification expressly
provides that the amendments made
apply to such modification

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 MORTGAGE
INTEREST
Repeals deduction on home
equity interest

Limits acquisition indebtedness to

$750,000

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 SALE OF
PRINCIPAL
RESIDENCE
Exclusion stays the same

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 MOVING EXPENSES &
EMPLOYER PROVIDED
HOUSING
Moving Expenses
Suspended for 2018 - 2025
Permitted for active duty Military only

Employer Provided Housing

Retained
Excluded from employees gross income

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 DEPENDENT CARE &
ADOPTION ASSISTANCE

Dependent Care Assistance

Retained
Deduction allowed for
children under 13 or disabled
dependent

Adoption Assistance
Retained
Credit up to $13,570

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 CHILD TAX
CREDIT
Increases to $2,000 per child
Refundable portion up to $1,400
Additional $500 per other
dependent
Earned income of $2,500 to qualify
for refundable credit (lowered
from $3,000)

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 CHARITABLE
CONTRIBUTIONS
Cash contributions limited to 60% of
taxpayers contribution base for the year
(2018-2025)
The 30% and 20% AGI limitations remain
5 year carryover retained for excess
contributions

To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document is not intended for the purpose
of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 ALTERNATIVE MINIMUM
TAX (INDIVIDUALS)
Increases exemptions
From $78,750 to $109,400 | MFJ
From $50,600 to $70,300 | Single

Increases phaseout thresholds

From $150,000 to $1,437,600 | MFJ
From $112,500 to $781,200 | Single

Applies for 2018-2025

To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document is not intended for the purpose
of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 OTHER
MISCELLANEOUS
PROVISIONS
Repeal of rule permitting re-
characterization of Roth IRA contributions
as Traditional
Extended rollover period for retirement
plan loan offset amounts
Craft beverage (wine, beer, and distilled
spirits) rules
Alaska Native Settlement Trusts
Aircraft management services
Opportunity zones

To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document is not intended for the purpose
of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 BUSINESS CHANGES
To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document is not intended for the purpose
of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 CORPORATIONS
Reduced income tax rate of 21%
(beginning in 2018)
AMT repealed

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 PASS-THROUGH
ENTITIES
Deduction for the LESSER of:
20% of qualified business income (QBI), or
20% of taxable income (excluding capital
gains)

If taxable income exceeds threshold

amount, deduction limited to the greater
of:
50% of wages
OR
25% of wages plus
2.5% of capital

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 PASS-THROUGH
ENTITIES
Deductible amount (and wage
limitation) are determined for
each trade or business

Small Business Exception no

wage limitation for pass-throughs
under $315K of income

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 SERVICE
BUSINESSES
Full deduction up to $315k
married ($157,500k single)
Deduction phases out at
$415k married ($207,500k
single)
Applies to businesses where the
principal asset of such trade or
business is the reputation or skill of
1 or more of its employees

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 QUALIFIED
BUSINESS INCOME
Qualified business income does not
include:
Any capital gains or losses
Dividends
Interest income (unless allocable to
a trade or business)
Other (e.g., foreign personal
holding company income and
certain annuity income)
Reasonable compensation and
guaranteed payments are NOT QBI

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 Pass-through $ 400,000
QB Deduction 20%
$ 80,000

EXAMPLE Taxable Income $ 320,000

PASS-THROUGH Tax Rate 37%
ENTITIES
$ 118,400

Effective Rate 29.6%

($118,400 / $400,00)

To ensure compliance with requirements imposed by the Department of Treasury, we inform you any U.S. federal tax advice contained in this document is not intended for the purpose
of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 PLANNING
POINT!
Defer Income into 2018

Delay collecting accounts

receivable
Pay down accounts payable

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 PLANNING
POINT!
Accelerate Deductions
Write-off uncollectible accounts receivable
Write-off obsolete inventory
Accrue state tax, payroll, and all other
business expenses
Pay employee bonuses by March 15, 2018
Additional CAPEX by December 31, 2017

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 SMALL BUSINESS
REFORMS
Exceptions for small businesses

Inventory accounting may treat

property as non-incidental material or
supply
Expanded use of cash basis method of
accounting
Uniform capitalization of certain
expenses
Percentage of completion method
(applicable to taxpayers other than a
tax shelter)

$25M average gross receipts test

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 CHANGES TO BONUS
DEPRECIATION
1 2 3 4

Expiration?
50% 100% 80-20%
1/1/2017 9/27/2017 1/1/2023
to to to
9/26/2017 12/31/2022 12/31/2026

New or used property

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 SECTION 179
Increases to $1M
Annual limit (before reduction)
increases to $2.5M
Qualified real property is eligible
Permanent provision

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 OTHER COST
RECOVERY
PROVISIONS
Luxury automobiles max. deductions
were increased
1st taxable year $10,000 (from $3,160)
2nd taxable year $16,000 (from $5,100)
3rd taxable year $9,600 (from $3,050)
4th taxable year $5,760 (from $1,875)
Removal of computer equipment from listed
property

Reduction in recovery periods to 25 years for real

property (both residential rental and
nonresidential)

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 LIKE-KIND
EXCHANGES
Now limited to real property
Excludes real property held
primarily for sale

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 EXCESS BUSINESS
LOSSES
Aggregate business losses are only
allowed up to

$500,000 (MFJ)
$250,000 (Single)

Disallowed losses are treated as a NOL

carryover

No limit for C corporations

Effective for tax years 2018 2025 only

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 NET OPERATING
LOSSES
Limited to 80% of taxable income
Repeal of NOL carryback
Indefinite carryforward
Exceptions
Farming
Insurance

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 EMPLOYER-PROVIDED
FRINGE BENEFITS
Employer-provided deductions REPEALED
Entertainment expenses for employees
Transportation & commuting benefits
Eating/beverage facilities furnished for
the convenience of employer (starting
in 2026)

Other fringe benefit changes

Deduction for meals for employees
retained
ONLY if on/near premises (50% limit)

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 INTEREST
DEDUCTION
For all businesses, the deduction is not to
exceed
Business interest income, plus 30% of AGI
Amount not allowed is treated as business
interest for succeeding tax year
Exceptions
Small businesses can deduct 100% ($25M
gross receipts)
Floor plan financing
Real property trades or businesses by
electing out

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 BUSINESS DEDUCTIONS
AND CREDITS
REPEALED

Manufacturers deduction
repealed

Worker opportunity tax credit

stays

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 BUSINESS TAX
CREDITS ADJUSTED
No changes to Tip Credit

Rehabilitation Credit
Pre-36 building rate increased
from 10% to 20%
Claimed over 5 years v. current
year

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 PAID FAMILY &
MEDICAL LEAVE
New credit for wages paid during
family & medical leave
Credit is 12.5% - 25% (depending on
what % of the employees normal
wages are paid during leave)
Must pay employee at least 50% of
normal pay
Qualifying employees
Employed at least one year
Wages less than $48K

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 INTERNATIONAL TAX
PROVISIONS
Territorial tax system
Tax on previously untaxed foreign earnings
14.49% cash and cash equivalents
7.49% non-cash assets
Payable over 8 years
Proportional reduction in foreign tax
credits attributable to previously untaxed
foreign earnings
Base erosion provisions

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
*Please see your Bowers & Company Representative for recommendations on your specific situation.
 NEW YORK
STATE
WHAT WILL THEY DO?

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 ESTATE AND
GIFT TAXES
Doubles exemption in 2018
$5M $10M
Indexed for inflation
No repeal (Senate)
Gift tax at $15,000/year

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 SHOULD I BE A
C CORPORATION?
POSITIVES

Lower rate
Deductibility of state taxes
NYS treatment (if a manufacturer)
Shareholders

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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 SHOULD I BE A
C CORPORATION?
NEGATIVES

Double taxation on dividends

Double taxation on liquidation
NIIT on dividends

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of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.
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