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There I was sitting in an Uber the first week of the New Year on my way to a meeting in New Orleans (Louisiana not the Casino in Vegas). I had just spend 14 hours in airports and planes and all I wanted to do was get to my hotel and sleep. Unfortunately for me, all the Uber driver wanted to do was talk.

He eventually wrangled out of me that I knew something about accounting and then it was on….why won’t the bank approve my loan when my cash flow is…..what are the provisions of the recent tax act….is the 20% gross or net…what are the new brackets…this went on the whole drive.

Fortunately, I had read up a bit on the new act while I was trying to fall asleep one evening and while, I did not share the entirety of the act with him, I was able to get in most of the following:

FOR INDIVIDUALS:

The Good:

  • Tax rate reductions to all but the lowest tax bracket.
  • Broader tax brackets that are indexed to a Consumer Price Index.
  • The almost doubling of the standard deductions.
  • Increase in child tax credit.
  • The Bad:

  • Moving expenses are no longer deductible unless it is for military purposes.
  • Mortgage interest and state and local income tax deductions are capped.
  • And the Ugly:

  • Personal and dependent exemptions are eliminated.
  • Alimony, employee business expenses, and tax preparation fees are no longer deductible.
  • FOR BUSINESSES:

    The Good:

  • A flat tax rate of 21% for C-Corporations.
  • A 20% deduction on qualified business income for pass-through entities that is phased out for non-architectural and engineering service companies.
  • Increase in section 179 deduction and allows immediate expensing of short-lived capital investments.
  • The Bad:

  • Reduces the deductibility of company meals from 100% to 50%.
  • Limits the amount of interest expense that can be deducted.
  • And the Ugly:

  • Eliminates net-operating-loss carrybacks and carryforwards are limited.
  • Eliminates the domestic production activities deduction.
  • Entertainment and sports tickets expense deductions are no mas.
  • ***

    Of course there is much more than I have listed here, but as you can see it will be interesting to see how these shake out over the next year. The immediate good news is that all employees will see a bigger paycheck, whether they get to keep it all or not has yet to be seen.

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