The Camp US tax reform proposal: what’s inside?

House Ways and Means Committee Chairman Dave Camp (R-Michigan) this week introduced a draft of the most comprehensive reform of the Internal Revenue Code in decades.

The key principles in the draft are:

(1) a deep reduction in individual and corporate tax rates

(2) elimination of numerous tax expenditures in exchange for the lower rates (the draft, for example, would eliminate all of the business credits that expired at the end of 2013 except for the credit for research which would become permanent as described below)

(3) establishment of a new competitive international tax system based on a dividend-exemption system and the expansion of Subpart F for certain foreign income and

(4) simplification reforms both in the substantive tax area and in tax administration.

The Camp plan will contribute to the continuing debate on tax reform among policy makers in Washington. The new Chairman of the Senate Finance Committee, Ron Wyden (D-Oregon), the author himself of a comprehensive tax reform proposal in the last Congress, is expected to unveil his own plans for tax reform in the near future.

In this review, we analyze key provisions of the Camp plan, looking at current law, Camp’s proposals and their potential impact.  We cover every aspect of this massive proposal.  To find out more about what concerns you, navigate to your area of interest.  

Individual Income Tax

I.          Individual tax rates (Sections 1001 – 1003)

Current law

A taxpayer generally determines individual tax liability by identifying the applicable bracket within which such individual’s regular taxable income falls and adding the amount of tax specified in that bracket to the product of (i) the rate associated with that bracket multiplied by (ii) the excess of regular taxable income over the lower threshold of that bracket.  There are seven regular individual income tax brackets of 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.  The income levels for each bracket threshold are indexed annually based on increases in the Consumer Price Index (CPI).  A separate rate schedule applies to adjusted net capital gain and qualified dividends, with rates of 0%, 15% and 20%.  Additional special rates of 25% and 28% apply to certain kinds of capital gain.

Proposed law

The current seven tax brackets would be reduced to three: 10%, 25% and 35%.  The schedule for married persons filing a joint return would be:

Taxable Income

Tax

Not more than $71,200

10% of regular taxable income

More than $71,200

$7,120 plus 25% of regular taxable income in excess of $71,200

For single filers, the new 25% bracket would begin at $35,600.  Taxpayers having taxable income of more than $450,000 (35% threshold) ($400,000 for single filers) would compute their tax as the sum of the tax computed under the foregoing table plus 10% of the excess of modified adjusted gross income (MAGI) over the 35% threshold. Starting in 2015, these income levels would be indexed for “chained CPI” instead of CPI, a slightly different measure of inflation.

The MAGI definition would prevent the 35% bracket from applying to qualified domestic manufacturing income (QDMI) so that such income would be taxed at a maximum rate of 25%.  QDMI generally would include net income attributable to gross receipts derived from manufacturing, producing, growing or extracting tangible personal property in whole or in significant part within the United States, or constructing real property in the United States as part of the active business.

The MAGI definition would also cause certain deductions and exclusions from gross income to reduce taxable income in the 25% or lower bracket only, but not taxable income in the 35% bracket.  Affected items include the standard deduction; all itemized deductions except the deduction for charitable contributions, the deduction for contributions to Health Savings Accounts and the deduction for health premiums of the self-employed; the exclusions for foreign earned income, tax exempt interest; employer contributions to health, accident and defined contribution retirement plans and the excluded portion of Social Security benefits. 

For high-income taxpayers, the benefit of the 10% bracket – measured as the difference between what the taxpayer pays and what the taxpayer would have paid had the first dollar of taxable income been subject to the 25% bracket – would be phased out at a rate of $5 of tax savings for every $100 of MAGI in excess of $250,000 (single filers) or $300,000 (joint filers). These thresholds are adjusted for chained CPI in tax years after 2013.

The special rate structure for net capital gain would be repealed. Instead, non-corporate taxpayers could claim an above-the-line deduction equal to 40% of adjusted net capital gain – the sum of net capital gain and qualified dividends, reduced by net collectibles gain, as these items are defined under current law.

The provision would generally be effective for tax years beginning after 2014.  But, the exemption of QDMI from the 35% bracket would be phased in over three years, with only one-third of QDMI being excluded from the top bracket in tax year 2015, and two-thirds being excluded in 2016.

Potential impact of proposed law

The new manner of taxing income in the highest bracket would, in effect, make interest on state and local municipal obligations (net of related expenses) subject to a 10% tax.  This is likely to depress demand for tax-exempt municipal obligations.

Net capital gain and qualified dividend income would be taxed at a maximum rate of 24.8% (taking into account the 3.8% tax on net investment income imposed by the Patient Protection and Affordable Care Act, often called the Health Care Act), a slight decrease in the top effective rate under current law (which is 25% taking into account the 3.8% tax under the Health Care Act and the impact of the overall limitation on itemized deductions under Section 68).

In general, ordinary income arising from a profitable business would be taxed at a maximum rate of 38.8% (taking into account the 3.8% tax imposed by the Health Care Act), a decrease of 5.8% from the current maximum rate at which such income is taxed.  Under the proposal, a dollar of profit earned by a C corporation and distributed to its shareholders (net of the proposed 25% corporate level tax) would be subject to an effective rate of 43.6%.  Thus, the current law bias in favor of operating a privately held profitable business in a passthrough entity (e.g., a partnership or S corporation) rather than a C corporation should continue under the proposal.  If such a business involves manufacturing, production or other activities that can qualify as QDMI, the bias becomes more pronounced as the effective rate on the passthrough entity business owner drops to 28.8%.

II.        Changes to certain deductions, exclusions and certain other provisions (Sections 1401 through 1422)

a.  Exclusion of gain from sale of a principal residence

Current law. A taxpayer may exclude from gross income up to $500,000 for joint filers ($250,000 for other filers) of gain on the sale of a principal residence. The property generally must have been owned and used as the taxpayer’s principal residence for two out of the previous five years. A taxpayer may only use this exclusion once every two years.

Proposed law.  A taxpayer would have to own and use a home as the taxpayer’s principal residence for five out of the previous eight years to qualify for the exclusion and the taxpayer would only be able to use the exclusion once every five years. The exclusion would be phased out by one dollar for every dollar by which a taxpayer’s MAGI exceeds $500,000 ($250,000 for single filers). The provision would be effective for sales and exchanges after 2014.

b.  Mortgage interest

Current law.  A taxpayer may claim an itemized deduction for mortgage interest paid with respect to a principal residence and one other residence of the taxpayer. Itemizers may deduct interest payments on up to $1 million in indebtedness incurred to acquire, construct or substantially improve the residence, and up to $100,000 in home equity indebtedness. Under the alternative minimum tax (AMT), the deduction for home equity indebtedness is disallowed.

Proposed law.  A taxpayer may continue to claim an itemized deduction for interest on acquisition indebtedness, but the $1 million limitation would be reduced to $500,000 in four annual steps, so that it would be $875,000 for debt incurred in 2015, $750,000 for debt incurred in 2016, $625,000 for debt incurred in 2017 and $500,000 for debt incurred thereafter.  Iinterest on home equity indebtedness incurred after the effective date would no longer be deductible. The provision would generally be effective for interest paid on debt incurred after 2014. In the case of a refinancing of debt incurred during the phase-in period, the refinancing debt generally would be treated as incurred on the same date that the original debt was incurred for purposes of determining the limitation amount applicable to the refinancing debt.

c.  Charitable contributions

Current law. A taxpayer may claim an itemized deduction for charitable contributions made during the taxable year. The charitable contribution deduction is limited to a certain percentage of the individual’s adjusted gross income (AGI). Cash contributed to public charities, private operating foundations and certain non-operating private foundations may be deducted up to 50% of the donor’s AGI. Contributions that do not qualify for the 50% limitation (e.g., contributions to private foundations) may be deducted up to the lesser of (1) 30% of AGI, or (2) the excess of the 50% limitation over the amount of charitable contributions subject to the 30% limitation. Capital gain property contributed to public charities, private operating foundations and certain non-operating private foundations may be deducted up to 30% of AGI. Capital gain property contributed to non-operating private foundations may be deducted up to the lesser of (1) 20% of AGI or (2) the excess of the 30% limitation over the amount of property subject to the 30% limitation for contributions of capital gain property. In general, qualified conservation contributions (e.g., conservation easements) are subject to the 30% limitation.

If an individual contributes more than the applicable AGI limits, the excess contribution generally may be carried over and deducted in the following 5 tax years, or 15 years in the case of qualified conservation contributions.

In general, taxpayers may deduct the fair market value of a charitable contribution. A variety of complex rules under current law, however, limit the amount of a charitable deduction to less than fair market value (e.g., the taxpayer’s adjusted basis) based on the type of property and charitable organization receiving the contribution.

A charitable deduction is generally disallowed to the extent a taxpayer receives a benefit in return. A special rule, however, permits taxpayers to deduct as a charitable contribution 80% of the value of a contribution made to an educational institution to secure the right to purchase tickets for seating at an athletic event in a stadium at that institution.

The value of a deduction for intellectual property is generally limited to the property’s adjusted basis. Under current law, however, the donor is allowed an additional deduction equal to a percentage of the income generated by the intellectual property over the 12 years following the contribution, even if that income is earned by a tax-exempt entity.

Proposed law.  The rules applicable to charitable contributions would be changed as follows, effective, except as otherwise indicated, for tax years after 2014.

Extension of time to file: Iindividual taxpayers would be permitted to deduct charitable contributions made after the close of the tax year but before the original due date of the return for such tax year.

AGI limitations: The AGI limitations would be substantially simplified:

  • The 50% limitation for cash contributions and the 30% limit for contributions of capital gain property to public charities and certain private foundations would be converted into a single limit of 40%.
  • The 30% limit for cash contributions and the 20% limit for contributions of capital gain property that apply to organizations not covered by the current 50% limit would be converted into a single limit of 25%.  This type of contribution would be allowed to the extent the aggregate amount thereof does exceed the lesser of (1) 25% of AGI or (2) the excess of 40% of AGI for the tax year over the amount of charitable contributions subject to the 25% limitation.

The 2% floor: An individual’s charitable contributions could be deducted only to the extent they exceed 2% of the individual’s AGI. The reduction would apply to charitable contributions in the following order: first, to contributions subject to the 25% of AGI limit, second, to qualified conservation contributions and third, to contributions subject to the 40% limitation.

Value of deduction generally limited to adjusted basis: The amount of any charitable deduction generally would be equal to the adjusted basis of the contributed property. For the following types of property, however, the deduction would be based on the fair market value of the property less any ordinary gain that would have been realized if the property had been sold by the taxpayer at its fair market value:

  • tangible property related to the exempt purpose of the donee exempt organization
  • any qualified conservation contribution
  • any qualified inventory contribution
  • any qualified research property
  • publicly traded stock and
  • inventory contributed solely for the care of the ill, needy or infants.

College athletic event seating rights: The special rule that provides a charitable deduction of 80% of the amount paid for the right to purchase tickets for athletic events would be repealed.

Income from intellectual property: Income from intellectual property contributed to a charitable organization would no longer be allowed as an additional deduction by the donor.

d.  Denial of deduction for expenses attributable to the trade or business of being an employee

Current law. A taxpayer generally may claim a deduction for trade and business expenses, regardless of whether the taxpayer itemizes deductions or take the standard deduction. Expenses relating to the trade or business of being an employee are deductible only if the taxpayer itemizes deductions. Certain expenses attributable to the trade or business of being an employee, however, are allowed as above-the-line deductions, including reimbursed expenses included in the employee’s income and certain other expenses.

Proposed law.  A taxpayer would not be allowed an itemized deduction for expenses attributable to the trade or business of performing services as an employee. In addition, the only above-the-line deductions allowed for expenses attributable to the trade or business of being an employee would be those for reimbursed expenses and certain expenses of members of reserve components of the United States military. The provision would be effective for tax years beginning after 2014.

e.  Repeal of deduction for taxes not paid or accrued in a trade or business

Current law. An individual may claim an itemized deduction for State and local government income and property taxes paid.

Proposed law.  Individuals would only be allowed a deduction for State and local taxes paid or accrued in carrying on a trade or business or producing income. The provision would be effective for tax years beginning after December 31, 2014.

f.  Repeal of deduction for personal casualty losses

Current law. An individual may claim an itemized deduction for personal casualty losses (i.e., losses not connected with a trade or business or entered into for profit), including property losses arising from fire, storm, shipwreck or other casualty, or from theft.

Proposed law.  The deduction for personal casualty losses would be repealed. The provision would be effective for tax years beginning after 2014.

g.  Repeal of deduction for tax preparation expenses

Current law: An individual may claim an itemized deduction for tax preparation expenses.

Proposed law. An individual would not be allowed an itemized deduction for tax preparation expenses. The provision would be effective for tax years beginning after 2014.

h.  Repeal of deduction for medical expenses

Current law. A taxpayer may claim an itemized deduction for out-of-pocket medical expenses of the taxpayer, a spouse or a dependent to the extent the expenses exceed 10% of the taxpayer’s AGI.

Proposed law. The itemized deduction for medical expenses would be repealed. The provision would be effective for tax years beginning after 2014

i.  Repeal of disqualification of expenses for over-the-counter drugs under certain accounts and arrangements

Current law. Expenses incurred for over-the-counter medicine could constitute qualified medical expenses for purposes of receiving tax-favored reimbursements from Health Savings Accounts, Archer MSAs and Health Flexible Spending Arrangements (health accounts) prior to the enactment of section 9003 of the Health Care Act, which limited tax-free disbursements from health accounts to pay for medicine other than prescription medication and insulin.

Proposed law. The prohibition on using tax-free funds from health accounts to pay for over-the-counter drugs would be repealed, and expenses for such medication could again constitute qualified medical expenses. The provision would be effective for expenses incurred after 2014.

j.  Repeal of deduction for alimony payments and corresponding inclusion in gross income

Current law. Alimony payments generally are an-above-the line deduction for the payor and included in the income of the payee.

Proposed law. Alimony payments would not be deductible by the payor or includible in the income of the payee. The provision would be effective for any divorce decree or separation agreement executed after 2014 and to any modification after 2014 of any such instrument executed before such date if expressly provided for by such modification.

k.  Repeal of deduction for moving expenses

Current law. A taxpayer may claim a deduction for moving expenses incurred in connection with starting a new job, regardless of whether or not the taxpayer itemizes his deductions.

Proposed law. The deduction for moving expenses would be repealed. The provision would be effective for tax years beginning after 2014.

l.  Repeal of 2% floor on miscellaneous itemized deductions

Current law.“Miscellaneous” itemized deductions may only be claimed to the extent such deductions in the aggregate exceed 2% of adjusted gross income. The floor applies to all certain itemized deductions. The floor applies after the application of any other limits on such deductions.

Proposed law. The 2% floor on miscellaneous itemized deductions would be repealed. The provision would be effective for tax years after 2014.

m.  Repeal of overall limitation on itemized deductions

Current law. The total amount of otherwise allowable itemized deductions (other than certain deductions) is limited for certain upper-income taxpayers. The otherwise allowable total amount of itemized deductions is reduced by 3% of the amount by which the taxpayer’s adjusted gross income exceeds a threshold amount. For 2013, the threshold amount is (1) $250,000 for single individuals, (2) $300,000 for married couples filing joint returns and surviving spouses, (3) $275,000 for heads of households and (4) $150,000 for married individuals filing a separate return. The limitation does not reduce itemized deductions by more than 8%.  The effect of the limitation is to increase the top marginal rate for individuals by approximately 1.2%.

Proposed law. The overall limitation on itemized deductions would be repealed. The provision would be effective for tax years after 2014.

n.  Fringe benefits

Current law. Certain fringe benefits provided by employers to employees are not included in employee income, including no-additional cost services and qualified transportation fringes. No-additional cost services include free air transportation to an employee, retired employee or dependent, spouse or parent of an employee or retired employee or widowed spouse of a deceased employee.

A qualified transportation fringe includes, for 2014, up to $250 per month for qualified parking and up to $130 for any transit pass provided by an employer to employees (with these amounts adjusted for inflation). The qualified transportation fringe also includes qualified bicycle commuting reimbursement of up to $20 per month.

Proposed law.  The provision would repeal the exclusion from income for air transportation provided as a no-additional cost service to the parent of an employee, permanently set the qualified parking amount at $250 per month and the excludable transit pass amount at $130 per month – repealing the inflation adjustment of these amounts – and repeal the qualified bicycle commuting reimbursement. The provision would be effective for tax years beginning after 2014.

o.  Repeal of exclusion of net unrealized appreciation in employer securities

Current law. Distributions from tax-deferred retirement plans generally are subject to tax, including the value of any securities distributed. In the case of a lump-sum distribution of employer securities, however, any net unrealized appreciation in the securities is excluded from income, unless the individual elects to forgo the exclusion. A distributee’s basis in distributed employer securities is the securities’ fair market value, less the unrealized appreciation excluded from gross income, thus preserving any capital gain if the securities are later sold.

Proposed law. The exclusion for net unrealized appreciation in distributed employer securities would be repealed. The distributee generally would have income in the amount of the value of the distributed securities. The provision would be effective for distributions after 2014.

Potential impact of proposed law.  The repeal of itemized deductions for tax return preparation expenses, and the simplification impact on individuals of the entire proposal, is likely to have a significantly adverse effect on tax return preparers servicing primarily individual clients.  The repeal of disqualification of expenses for over-the-counter drugs as tax-favored distributions from health accounts is likely to benefit the pharmaceutical industry.  The repeal of the itemized deduction for state and local income and property taxes is likely to subject states and their political subdivisions to public pressure to  reduce those taxes.  The current regime permitting itemized deductions for such taxes tends to act as an indirect subsidy transferring tax revenues from the federal government to state and local jurisdictions.

Partnership Tax

I.          Repeal of rules related to guaranteed payments and liquidating distributions (Section 3611)

Current law

Under current law, payments by a partnership to a partner made for services or the use of capital and without regard to the partnership’s income are treated as “guaranteed payments”.  Guaranteed payments are generally deductible by a partnership, includible in the recipient’s income and are not treated as a distribution of income, capital or as payments made to a partner acting in a capacity other than as a partner.

In addition, current law treats partnership payments made in the liquidation of a retiring or deceased partner’s partnership interest as either (a) an income share or guaranteed payment or (b) a payment made in exchange for the partner’s interest in partnership property.  Special rules apply to a deceased partner as to partnership income for the year of death and the basis of the relevant partnership interest in the hands of the successor to the deceased partner.

Proposed law

The proposed provision eliminates the concept of guaranteed payments and treats payments to partners as either parts of their shares of partnership income or as received in a non-partner capacity (i.e., as an independent contractor).  Because of that elimination, partnership payments to a retiring or deceased partner could no longer be treated as guaranteed payments and would be subject to general rules applicable to the payments, such as payments of deferred compensation or subject to the applicable rules relating to income in respect of a decedent. 

The proposed provision would be effective for tax years beginning in 2014 and to: (a) transfers to decedents made after 2014 and (b) payments in liquidation to partners retiring or dying after 2014.

Potential impact of proposed law

The proposed provision may make it more difficult for a partnership to effectively expense payments made to partners, including payments made to retiring or deceased partners.

II.        Mandatory basis adjustments (Sections 3612 through 3614)

Current law

Under current law, immediately after a transfer of a partnership interest by a partner or distribution of property to a partner, the partnership is only required to make an adjustment to the basis of partnership property if: (a) the partnership makes a one-election or (b) if the partnership’s adjusted basis in its property exceeds fair market value by more than $250,000 (i.e. the partnership has a built-in loss).  The adjustments are generally intended to eliminate distinctions that may arise as to a partner’s outside partnership basis and share of inside partnership basis as to partnership property.  In certain circumstances, certain securitization and investment partnerships may be exempt from the mandatory basis adjustment where there are built in losses.  When basis adjustments are currently required in a partnership no corresponding adjustments are currently required in upper-tier or lower-tier partnerships owning an interest in the partnership making the required basis adjustment.

Proposed law 

Under the proposed provision, mandatory adjustment of a partnership’s basis in partnership property would be required after a transfer of a partnership interest by a partner or distribution of property to a partner.  These mandatory basis adjustment rules would also apply to securitization and investment partnerships.  Moreover, corresponding basis adjustments would be required in in upper-tier or lower-tier partnerships owning an interest in the partnership making the mandatory basis adjustment.

The provision would be effective for post-2014 transfers and distributions.

Potential impact of proposed law

The proposed provision may increase accounting costs for partnerships that have transfers of partnership interests or that distribute property to a partner.  In addition, the proposed provision may eliminate tax deferral benefits that may have continued to exist from a high partnership property basis that would otherwise not have been reduced but for the mandatory adjustment.

III.       Charitable deductions, foreign taxes and partner bases (Section 3615)

Current law

Under current law, a partner’s share of charitable deductions and foreign taxes paid by a partnership may be deducted by the partner even if they exceed the partner’s partnership basis.  This is in contrast to the general rule that a partner may only deduct the partner’s share of partnership expenditures and losses (otherwise deductible to the partner) to the extent of the partner’s partnership basis.

Proposed law

Under the proposed provision, a partner’s share of charitable deductions and foreign taxes paid by a partnership would be taken into account in calculating the partner’s basis limitation on deducting the partner’s share of partnership losses.

Potential impact of proposed law

To the extent of a partner’s share of charitable deductions and foreign taxes paid by a partnership, the proposed provision may decrease the ability of a partner to deduct partnership losses.

IV.       Unrealized receivables and inventory items (Section 3616)

Current law

Under current law, gain or loss from a partner’s sale or exchange of a partnership interest is generally a capital gain or loss.  To the extent of the partner’s share of unrealized receivables (unrealized gain inherent in uncollected payments for goods or services) or inventory appreciated by more than 120% (“substantially appreciated inventory”), however, the gain from that sale or exchange is ordinary income.  Similar rules may apply in the case of certain distributions to a partner when the partnership holds unrealized receivables or substantially appreciated inventory.

Proposed law

The proposed provision eliminates the requirement that inventory be substantially appreciated in order to trigger ordinary income recharacterization on a distribution of the inventory to a partner.  In addition, the definition of “unrealized receivable” is simplified to include any property, other than an inventory item, whose disposition would generate ordinary income if the property were sold for its fair market value.

The proposed provision would be effective for distributions and partnership tax years beginning after 2014.

Potential impact of proposed law

The proposed provision may increase the likelihood that a partner may have ordinary income from the sale or exchange of partnership interest or as a result of certain distributions to the partner.

V.        Taxing pre-contribution gain (Section 3617)

Current law

Under current law, if a partner contributes appreciated property to a partnership, there is no gain or loss on the contribution.  Instead, the pre-contribution gain or loss is preserved in the capital account of the partner.  Distribution of the appreciated property to another partner with in seven years of the contribution (the limitation period), triggers the pre-contribution gain or loss that was preserved in the contributing partner’s capital account.  Similar rules apply if other partnership property is distributed to the contributing partner within the limitation period.

Proposed law

The proposed provision eliminates the limitation period exception effective for property contributed to a partnership after 2014.

Potential impact of proposed law

The proposed provision eliminates the ability of partners to use a partnership to engage in what results in a disguised sale of property by a contributing partner.

VI.       Partnership interests created by gift (Section 3618)

Current law

Under current law, for purposes of the family partnership provisions, a person is treated as a partner if the person owns a capital interest in a partnership in which capital is “a material income producing factor,” whether the interest was acquired by purchase or gift from “another person”.

Proposed law

The proposed provision clarifies that “another person” may include a family member (i.e. a spouse, ancestor, lineal descendants and any trusts for the primary benefit of such persons).  The provision would be effective for tax years beginning after 2014.

Potential impact of proposed law

Since the proposed provision is a clarification, it may not have a significant effect on taxpayers participating in family partnerships.

VII.     Repeal of technical termination (Section 3619)

Current law

Under current law a partnership terminates for income tax purposes if:(a) no part of its business, financial operation or venture continues to be carried by on by any of its partners in a partnership or (b) within a 12-month period there is a sale or exchange of 50% or more of the total interest in partnership capital and profits (a “technical termination).  When a technical termination occurs, although the legal form of the partnership continues, the partnership is often forced to make  new tax elections, including for depreciation lives and other purposes.

Proposed law

The proposed provision eliminates the technical termination rule effective for tax years beginning after 2014.

Potential impact of proposed law

Repeal of the technical termination rule may save accounting costs incurred in making new tax elections for a continuing partnership business that would have had a technical termination under current law.  In other cases, where new tax elections would be advantageous, repeal of the technical termination rule would prevent those new elections from being made without the approval of the IRS.

VIII.    Publicly traded partnership restriction (Section 3620)

Current law

Under current law a partnership whose partnership interests are traded on an established securities market or are readily traded on a secondary market (publicly traded partnership) is generally treated as a C corporation.  An exception as to that C corporation treatment applies in the case of a publicly traded partnership (other than a “regulated investment company” described in Internal Revenue Code Section 851(a)) if 90% or more of the partnership’s gross income is qualifying income, such as interest, dividends, capital gains, rents from real property and certain minerals or natural resources activities.

Proposed law

Under the proposed provision, only Publicly Traded Partnerships with 90% or more of their gross income from certain minerals or natural resources activities would qualify for the exception from C corporation treatment.   The proposed provision would be effective for tax years beginning after 2016.

Potential impact of proposed law

The proposed provision will cause publicly traded partnerships that do not have 90% or more of their gross income from certain minerals or natural resources activities to be treated as C corporations.

IX.       Recharacterization of capital gains of certain service partners into ordinary income (Section 3621)

Current law

Under current law a partner’s share of a partnership’s income generally has the same character as that of the partnership.  Thus for example, a general partner managing a partnership holding only stock or securities would have a share of the partnership’s capital gain from the disposition of that stock or securities.  Similarly, if the general partner disposed of the partner’s partnership interest in that partnership, the general partner would generally have capital gain or loss from that disposition.

Proposed law

The proposed provision would change current law as to an “applicable partnership interest”.  An applicable partnership interest would include any interest transferred, directly or indirectly, to a partner in connection with the performance of services if the partnership’s trade or business conducted on a “regular, continuous and substantial basis” consist of: (a) raising of returning capital, (b) identifying , investing in or disposing of other trades or businesses and (c developing such trades or businesses.  The provision would not apply to a partnership engaged in a real estate trade or business.

The proposed provision has a recharacterization formula whereby the service partner’s applicable share of the partnership’s invested capital (based on contribution amount and value, including loans to the partnership and debt entitled to share in partnership equity) would be treated as generating ordinary income by multiplying that applicable share by a specified rate of return (the federal long-term interest rate plus 10 percentage points).  This formula is intended to approximate the compensation earned by the service partner for managing partnership capital.   The recharacterization amount would be determined annually (but not realized) and tracked over time in a recharacterization account.  

On a distribution by the partnership to the service partner or a realization event to the service partner (such as a disposition of his partnership interest), the gain to the service partner would be treated as ordinary to the extent of the partner’s “recharacterization account balance” for the tax year.  Amounts in excess of the recharacterization account balance would be treated as capital gain.

All applicable partnership interests held (directly or indirectly) by a service partner in a partnership would be aggregated and treated as a single interest.

The proposed provision would be effective for tax years beginning after 2014.

Potential impact of proposed law

If a partnership has “applicable partnership interests,” the proposed provision may create significant: (a) additional income tax liability for the service partners holding applicable interests and (b) accounting costs to: (i) keep track of the recharacterization account balances of the service partners holding those applicable interests and (ii) calculate the recharacterization as ordinary income of what, but for the proposed provision, would otherwise be capital gain to a service partner.

X.        Partnership audits and adjustments (Section 3622)

Current law

Under current law, there are different audit regimes for auditing different sized partnerships.   For partnerships with 10 or less partners, the IRS generally audits the partnership and the partners separately.   For most partnerships with more than 10 partners, the IRS generally conducts the audit at the partnership level under so-called TEFRA rules and, once the audit is complete for an audit year, the IRS calculates the adjustments for each partner for that audit year.  Partnerships with 100 or more partners that elect to be treated as Electing Large Partnerships (ELPs) are under a separate audit regime where IRS adjustments flow through to the partners for the year of adjustment rather than the year of audit.

Proposed law

Under the new provision, the TEFRA and ELP rules would be repealed and the partnership audit rules are streamlined into a single set of rules for auditing partnerships and their partners.  Any adjustments would be taken into account by partners in the “adjustment year” i.e. the year that the audit or relevant judicial review is complete.  A partnership would also have the option of initiating an adjustment for a reviewed year.  Partnerships with less than 100 partners would be able to opt out of the new rules and be audited under the general rules applicable to individual partners.

Potential impact of proposed law

The impact on clients will depend on the size of the partnerships in which they participate and alternatives elected by those partnerships.

Corporate Income Taxes

 

I.          General provisions

a.  Repeal of Alternative Minimum Tax (Section 2001)

Current law

Taxpayers must compute their income for purposes of both regular income tax and the alternative minimum tax (AMT), and their tax liability is equal to the greater of their regular income tax liability or AMT liability.  Alternative minimum taxable income (AMTI) represents a broader base of income than regular taxable income.  AMT credits may be carried forward and claimed against regular tax liability in any future tax year to the extent such liability exceeds AMT.

Proposed law

The AMT is repealed effective for tax years beginning after 2014.  If a taxpayer has AMT credit carryforwards, the taxpayer would be able to claim a refund of 50% of the remaining credits (to the extent credits exceed regular tax for the year) in the tax years beginning in 2016, 2017 and 2018.  A refund for all remaining credits may be claimed in 2019.

Potential impact of proposed law

The requirement to compute two tax liabilities is among the most burdensome complexities of the current Internal Revenue Code, and the repeal of the AMT should save taxpayers time and resources because of the elimination of the second tax computation.

b.  The 25% corporate tax rate (Section 3001)

Current law

The highest marginal corporate income tax rate is 35%.  Personal services corporations are not entitled to use the graduated corporate rates below the 35% rate. 

Proposed law

The proposal provides for a flat corporate income tax rate of 25% beginning in 2019.  Taxable income up to $75,000 will be subject to this 25% rate in 2015, with the rate on income above that level phased down to 25% during the years 2015-2019.  Further, the special rule applicable to personal services corporations would be repealed effective for tax years beginning after 2014.

Potential impact of proposed law

The current corporate tax rates are among the highest in the industrialized world that many have argued puts American companies at a competitive disadvantage with their non-US counterparts. Because this provision is anticipated to reduce revenues, it is likely that various deductions companies have traditionally relied upon will be repealed or modified, as evidenced by other provisions included in the Proposal.

II.        Reform of exclusions and deductions

a.  Reform of accelerated cost recovery system (Section 3104)

Current law

Under current law, certain property used in a trade or business or for the production of income is subject to depreciation under the modified accelerated cost recovery system (MACRS).  Under MACRS, the 200% or 150% declining balance methods are generally applicable with respect to tangible personal property, generating larger depreciation deductions in the early years than would the straight-line method, until the tax year in which the straight-line method would produce a larger deduction, at which point the straight-line method is used.  Certain special depreciation provisions enacted over the last several years have also accelerated cost recovery for certain assets, such as 50% or 100% bonus depreciation for certain property placed in service from 2008 through 2013.

Proposed law

The proposal would repeal MACRS and replace it with a system substantially similar to the “alternative depreciation system” (ADS) that currently applies under certain circumstances, such as with respect to corporate taxpayers subject to AMT.  Under the proposal, depreciation deductions would be determined under the straight line method, and the depreciation period with respect to certain asset classes would be lengthened.  The proposal would permit taxpayers to elect to take an additional depreciation deduction to account for the effects of inflation on depreciable property, based on the chained CPI rate for the year.

The proposal would require the Treasury Department, in consultation with the Bureau of Economic Analysis, to develop a new depreciation schedule to more closely reflect the useful lives of assets and submit a report to Congress by December 31, 2017. 

The new provisions would apply with respect to property placed in service after 2016.

In addition to repealing MACRS, the proposal would also repeal a number of special depreciation provisions, including bonus depreciation, and the 15-year depreciation applicable to qualified leasehold improvements.

Potential impact of proposed law

The proposal would generally serve to reduce the magnitude of a taxpayer’s annual depreciation deductions, primarily in the early years after an item of depreciable property is placed in service, thereby increasing the taxpayer’s annual taxable income in those years.  Although the aggregate depreciation deductions would remain the same, on a present value basis, the value of the depreciation deductions would be reduced.  The proposal would have the greatest impact on capital intensive industries that invest heavily in depreciable assets.

b.  Amortization of certain advertising expenses (§ 3110)

Current law

Although not addressed specifically in the Internal Revenue Code, the IRS generally allows taxpayers to treat advertising expenditures as an ordinary and necessary business expense. Additionally, with regard to amounts paid to develop a package design – even those whose useful life is beyond the current taxable year – such amounts are deductible as costs in the year incurred.

Proposed law

Certain advertising expenses would be currently deductible at a 50% rate, and the other 50% would be amortized ratably over a ten-year period.  This rule would phase in for tax years beginning until 2018, when the 50/50 treatment would apply.  The proposal would also permit taxpayers to expense the first $1 million of advertising expenditures.  However, the $1 million would be reduced to the extent a taxpayer’s advertising costs exceed $1.5 million and completely phase out once advertising costs exceed $2 million.  This provision would be effective for amounts paid or incurred in tax years beginning after 2014.

The proposal defines advertising expenses to include any amount paid or incurred for development, production or placement of any communication to the general public intended to promote the taxpayer’s trade or business.  Such expenses would also include wages paid to employees who primarily engage in activities related to advertising.  Advertising expenses would not include: depreciable property, amortizable section 197 intangibles, discounts, certain communications on the taxpayer’s property, the creation of logos and trade names, marketing research, business meals and qualified sponsorship payments.  Finally, amounts paid to develop a package design will be capitalized into the cost of producing the packaging and recovered as the packaging is sold.

Potential impact of proposed law

Many US companies spend a significant amount of capital on marketing and advertising, and many of those expenses, including the wages of employees focused on marketing and advertising, have generally been currently deductible when calculating net taxable income. Although the proposed legislation calls for a lower corporate income tax rate, the net effect may be increased tax cost given the limitation on the current deductibility of certain advertising expenses.

c.  Phase-out and repeal of domestic production deduction (Section 3122)

Current law

Under current law, subject to certain limitations, taxpayers may claim a deduction equal to 9% (or 6% as to certain oil and gas activities) of the lesser of the taxpayer’s taxable income or the taxpayer’s “qualified production activities income” for the applicable tax year.  “Qualified production activities income” is equal to the excess of certain gross receipts derived from property manufactured, produced, grown or extracted within the United States, certain film productions, production of electricity, natural gas or drinking water, construction activities performed within the United States and certain engineering or architectural services, over the costs thereof and expenses properly allocable to such gross receipts.

Proposed law

The proposal would phase out the deduction over two years (6% for tax years beginning in 2015 and 3% for tax years beginning in 2016) and would eliminate the deduction for tax years beginning after 2016.

Potential impact of proposed law

The proposal would reduce and eventually eliminate the special deduction currently available with respect to the types of activities described above.  The wide variety of taxpayers engaged in the specified activities would face a higher tax burden as a result of the elimination of the special deduction.

d.  Prevention of arbitrage of deductible interest expense and tax-exempt interest income (§ 3124)

Current law

Taxpayers may not deduct interest on indebtedness incurred to purchase or carry obligations if the interest income from the obligations is exempt from tax (IRC § 265). The rule is intended to prevent taxpayers from engaging in tax arbitrage by deducting interest on indebtedness used to purchase tax-exempt obligations. There are two methods for determining the amount of the disallowance: one that applies to all taxpayers other than financial institution and dealers in tax-exempt obligations, and one that applies to financial institutions and dealers in exempt obligations. The second method includes a special rule that excludes certain qualified small issuer tax-exempt obligations from the pro rata disallowance rule. Additionally, individuals may not deduct investment interest in excess of net investment income, although such disallowed investment interest deductions may be carried over to the succeeding tax year.

Proposed law

All C corporations would be required to use the same interest-disallowance method. Thus, the interest deduction of any taxpayer would be disallowed based on the percentage of the taxpayer’s assets comprised of tax-exempt obligations. The special rule under present law for qualified small issuer tax-exempt obligations also would be repealed. In addition, a taxpayer’s investment interest deduction (other than a corporation or financial institution) would be permanently disallowed by the amount of tax-exempt interest received. Any remaining interest deduction would still be limited to the taxpayer’s net investment income. The provision relating to the interest-disallowance method would be effective for tax years ending after and obligations issued after February 26, 2014. The provision relating to the investment-interest deduction would be effective for tax years beginning after 2014. 

Potential impact of proposed law

This provision will potentially increase the tax cost of those taxpayers who are subject to the method that inquires whether their borrowing can be traced to their holding of tax-exempt obligations and those taxpayers who are subject to the second method and whose portfolio includes a significant amount of qualified small issuer tax-exempt obligations.

e.  Research credit modified and made permanent (Section 3203)

Current law

Under current law, a taxpayer could claim a credit for qualified US-based research expenses prior to 2014.  The research credit had three components:

  • A taxpayer could claim a credit equal to 20% of the amount by which the taxpayer’s qualified research expenses for a tax year exceeded its base amount for that tax year.  An alternative, simplified research credit (ASC) could be claimed in lieu of the above basic credit in an amount generally equal to 14% of the qualified research expenses for the tax year that exceeded 50% of the average qualified research expenses for the prior three tax years.
  • A taxpayer could claim a 20% credit for certain amounts paid to universities and certain non-profit scientific research organizations for basic research.
  • A taxpayer could claim a 20% credit for certain amounts paid to energy research consortiums for research conducted by such organizations.

Deductions otherwise allowed to a taxpayer with respect to its research expenses were reduced by the amount of the research credit for the tax year.  A taxpayer could alternatively elect to claim a reduced research credit in lieu of reducing its otherwise allowable deductions.

Proposed law

The proposal would make permanent a modified version of the research credit.  The new research credit would generally equal the ASC portion of the prior research credit (though utilizing 15%, rather than 14%, of qualified research expenses for the tax year in excess of 50% of the average qualified research expenses for the three prior tax years), plus 15% of the basic research payments made for the tax year that exceed 50% of the average basic research payments made for the three prior tax years.

The prior 20% credit for qualified research expenses, 20% credit for amounts paid to certain organizations for basic research, and 20% credit for amounts paid to an energy research consortium would be repealed.

The proposal would also repeal the election to claim a reduced research credit in lieu of reducing otherwise allowed deductions.

Under the new provision, amounts paid for supplies or with respect to computer software would no longer qualify as qualified research expenses.  The new provision would be effective for tax years beginning after 2013 and for amounts paid or incurred after 2013.

Potential impact of proposed law

As this credit is heavily relied upon by many corporations, there should be much relief that the credit was merely modified and made permanent, rather than being permanently repealed.

f.  Phaseout and repeal of credit for electricity produced from certain renewable resources (Section 3206)

Current law

A taxpayer may claim a credit a credit (the production tax credit or PTC) for the production of electricity from qualified energy resources. Qualified energy resources include, among others, wind, geothermal energy and solar energy. The base amount of the PTC is 1.5 cents (indexed annually for inflation) per kilowatt-hour of electricity produced. A taxpayer generally may claim a credit every year during a 10-year period for projects that begin construction before 2014.

Proposed law

The inflation adjustment would be repealed, effective for electricity and refined coal produced or sold after 2014. Therefore, taxpayers’ credit amount would revert to 1.5 cents per kilowatt-hour for the remaining portion of the 10-year period. The entire production tax credit would be repealed, effective for electricity and refined coal produced and sold after 2024.

Potential impact of proposed law

This provision will increase the tax cost to taxpayers that have availed themselves of the credits associated with developing and operating alternative energy resources.

III.       Financial instruments

a.  Treatment of certain derivatives (§ 3401)

Current law

Different sets of tax rules govern the taxation of the various types of financial derivatives (e.g., options, futures, swaps, swaptions, etc.).  The characterization of a taxpayer (e.g., dealer, trader, etc.) and the type of derivative are two primary factors that govern the income tax treatment of the gains and losses that result from derivative transactions, including the amount and timing of such gains and losses. There are a number of special rules that may also impact the tax treatment of such transactions.

Proposed law

Subject to certain exceptions (e.g., properly identified hedging transactions), derivative financial transactions generally would be marked-to-market at the end of each tax year, and any gains and losses from marking a derivative to market would be treated as ordinary income or loss. For offsetting financial positions that include at least one derivative position, all positions in the straddle would be marked to market. The provision would be effective for tax years ending after 2014, in the case of property acquired and positions established after 2014 and for tax years ending after 2019, in the case of any other property or position.

Potential impact of proposed law

The provision has the effect of accelerating gains (or losses) and potentially increasing tax cost because gains (or losses) would no longer be subject to preferential capital gains rates to the extent the derivatives were long-term. Businesses may need to reevaluate their risk management programs to consider the potential increased tax cost.

b.  Modification of certain rules related to hedges (§ 3402)

Current law

Taxpayers are permitted to match the timing and character of taxable gains and losses on certain hedging transactions with the gains and losses associated with the price, currency or interest rate risk being hedged. Taxpayers are only allowed such hedging tax treatment, however, if they properly identify the transaction as a hedge on the day they enter into the transaction, regardless of whether the taxpayer is properly treating the transaction as  a hedge for financial accounting purposes (see, e.g., Treas. Reg. §1.988-5). In addition, hedging tax treatment is available only if the risk being hedged relates to ordinary property held (or to be held) by the taxpayer or obligations incurred (or to be incurred) by the taxpayer.

Proposed law

Under the provision, taxpayers could rely upon – for tax purposes – an identification of a transaction as a hedge that they have made for financial accounting purposes. The provision also would modify the hedging tax rules so that the rules would apply when an insurance company acquires a debt instrument to hedge risks relating to assets that support the company’s ability to honor future insurance claims. The provision would be effective for hedging transactions entered into after 2014.

Potential impact of proposed law

This provision should add clarity to the hedging rules as applied to insurance companies that acquire debt instruments to hedge risks associated with honoring future claims. Allowing taxpayers to identify a hedge based on their financial statement treatment of a particular transaction should simplify the identification process, although it potentially has the effect of enabling taxpayers to use hindsight to choose the most beneficial tax treatment based on the value of the hedge or underlying hedged asset. This is one reason why the IRS has been reluctant to provide relief to taxpayers (even where reasonable cause exists) that do not properly identify a hedging transaction for US federal income tax purposes.

c.  Coordination with rules for inclusion not later than for financial accounting purposes (§ 3413)

Current law

The holder of a debt instrument that is issued with original issue discount (OID) generally accrues and includes in income (as interest) the OID over the life of the obligation, regardless of when the OID income actually is received (IRC §1272(a)(1)). In the case of prepaid interest, OID treatment results in a deferral of taxable income. Certain fees earned by credit card issuers and other financial institutions have been treated as OID income, which allows these institutions to postpone the imposition of tax on this income to later tax years (See, e.g., Capital One Fin. Corp. v. CIR, 659 F.3d 316 (4th Cir. 2011)).

Proposed law

Fees and other amounts received by a taxpayer would generally not be treated as OID income, which would require taxpayers on the accrual method of accounting to include an item of income no later than the tax year in which such item is included for financial statement purposes. The provision would be effective for tax years beginning after 2014.

Potential impact of proposed law

This provision will increase the current tax cost for credit card companies and other lenders and providers of credit that earn certain types of fees that have been characterized as OID income subject to recognition over a period of years.

d.  Termination of private activity bonds; termination of credit for interest on certain mortgages (§§ 3431, 3432)

Current law

Interest on private activity bonds (PABs) is excluded from gross income (and thus exempt from tax). The proceeds of PABs finance the activities of, or loans to, private parties, with indirect benefits accruing to the state or locality that issues the bond. The exclusion of interest on PABs generally is disallowed under the alternative minimum tax (AMT). Most PABs are subject to a single, aggregate national volume cap that is allocated annually among states by population, while other PABs have separate volume caps.

Some state and local governments issue PABs to finance owner-occupied residences. In lieu of issuing such bonds, state and local governments may provide homebuyers a federal tax credit for interest on certain home mortgages by providing them with mortgage credit certificates.

Proposed law

Interest on newly issued PABs would be included in income and thus subject to tax. Additionally, no federal tax credits would be allowed for mortgage credit certificates issued after 2014. The provisions would be effective for bonds issued after 2014 with regard to PABs and tax years ending after 2014 with regard to mortgage credit certificates.

Potential impact of proposed law

To the extent this provision becomes law, it will increase the cost of borrowing for PAB issuers as investors will expect a higher interest rate to compensate for the taxability of the interest paid under such bonds. 

e.  Repeal of advance refunding bonds (§ 3433)

Current law

A refunding bond is any bond used to pay principal, interest or redemption price on a prior bond issue (the refunded bond). A current refunding occurs when the refunded bond is redeemed within 90 days of issuance of the refunding bonds. An advance refunding is issued more than 90 days before the redemption of the refunded bond. Interest on current refunding bonds is generally not taxable. Interest on advanced refunding bonds is generally not taxable for governmental bonds but is taxable for PABs (see IRC §§ 103, 149).

Proposed law

Interest on advanced refunding bonds (i.e., refunding bonds issued more than 90 days before the redemption of the refunded bonds) would be taxable. Interest on current refunding bonds would continue to be tax-exempt. The provision would be effective for advance refunding bonds issued after 2014.

Potential impact of proposed law

Under current law, advance refunding encourages issuers to advance refund an original issue multiple times, because often issuers will invest the proceeds of an advance refunding in federal securities at a guaranteed yield equal to that of the refunding issue. Advance refunding resulted in multiple issues of bonds being outstanding simultaneously, and thereby in multiple indirect federal subsidies attributable to a single activity.  Because of the ability to advance refund, issuers are also more likely to accept terms and conditions that other borrowers will not be as likely to accept. Therefore, state and local governments can expect the cost of borrowing to increase under this provision.

IV.       Executive compensation

a.  Nonqualified deferred compensation (Section 3801)

Current law

Compensation generally is taxable to an employee and deductible by an employer in the year earned, with certain exceptions.  with respect to non-qualified deferred compensation, the employee does not include such compensation into income until the earlier of the year of receipt or the year in which any substantial risk of forfeiture is avoided, and the employer deduction is deferred until such time. 

Proposed law

An employee would be taxed on compensation at the time any substantial risk of forfeiture is avoided (i.e., compensation not subject to future performance of substantial services), effective for amounts attributable to services performed after 2014.  The current rules would continue to apply to existing non-qualified deferred compensation arrangements until the last tax year beginning before 2023.

Potential impact of proposed law

The provision has the effect of accelerating income recognition to employees that participate in non-qualified deferred compensation arrangements. 

b.  Modification of limitation on excessive employee remuneration (Section 3802)

Current law

Compensation expense generally is deductible as an ordinary and necessary business expense, subject to a $1 million deduction limitation with respect to each of the CEO and the next four highest compensated officers (each, a “covered employee”) of a publicly traded corporation.  The $1 million deduction limitation applies to all remuneration paid to a covered employee for services rendered, except for, inter alia, commissions and performance-based remuneration, which includes stock-options. 

Proposed law

The exceptions to the $1 million deduction limitation for, inter alia, commission and performance-based remuneration would be repealed, and the definition of “covered person” would include the CEO, CFO and the next three highest compensate employees.

Potential impact of proposed law

The provision has the effect of significantly limiting the compensation expense deduction available to publicly traded corporations with respect its officers or highly compensated employees that receive commissions or performance-based remuneration.

c.  Excise tax on excess tax-exempt organization executive compensation (Section 3803)

Current law

The deduction allowed to publicly traded C-corporations for compensation paid with respect to CEOs and certain highly compensated offices is limited to $1 million annually. 

Proposed law

Tax-exempt organizations would be subject to a 25% excise tax on compensation in excess of $1 million annually with respect to each of its five highest compensated employees (each, a “covered person”), applying to all remuneration paid.

Potential impact of proposed law

Current law generally does not limit compensation paid by a tax-exempt organization to its employees, other than the limitation on private inurement, and this provision is similar to the limitation on the deductibility of executive compensation by taxable publicly traded corporations.

d.  Denial of deduction as research expenditure for stock transferred pursuant to an incentive stock option (§ 3804)

Current law

An employer that transfers stock to an individual pursuant to an incentive stock option (ISO) plan or employee stock purchase (ESP) plan may not claim a deduction as an ordinary and necessary business expense under IRC § 162 for the value of such stock.  Some taxpayers have taken the position that a deduction is permitted as wages paid with respect to research expenditures under IRC § 174.

Proposed law

The rules with respect to incentive stock option plans and employee stock purchase plans would deny a deduction under any provision of the Code for a transfer of stock to an individual under such plans.

Potential impact of proposed law

The provision clarifies the Service’s position that stock transferred to an employee under an ISO or ESP plan is not deductible.

V.        Real estate

a.  Repeal of Section 1031 like-kind exchanges (Section 3133)

Current law

Under current law (Section 1031 of the Code), a taxpayer does not recognize gain or loss on a like-kind exchange of properties – that is, a transaction in which a taxpayer exchanges property held for productive use in a trade or business or for investment solely for replacement property of “like-kind” that the taxpayer will also hold for productive use in a trade or business or for investment.  The unrecognized gain or loss is not eliminated but deferred as a result of the replacement property taking a substitute basis from the relinquished property.  Although the like-kind exchange rules apply to a wide range of business assets, its use is most prevalent in the commercial real estate industry because of expansive interpretations of what is like-kind in the context of real property (for example, raw land and a commercial office building are treated as like-kind).

Proposed law

The Camp Proposal would repeal like-kind exchange nonrecognition treatment for transfers of property after 2014.  Under a transition rule, Section 1031 nonrecognition would continue to be available if a written binding contract is entered into in 2014, and the exchange under the contract is completed before January 1, 2017.  

Potential impact of proposed law

The repeal of like-kind exchanges would likely depress sales of properties and can be expected to be a significant blow to the commercial real estate industry.  Owners would be incentivized to hold on to properties longer, to avoid capital gains tax on a sale and reinvestment.  An industry spokesman estimated the volume of like-kind exchanges executed in a recent 12-month period by REITs alone to be approximately $85 billion; the Joint Committee on Taxation estimates that the repeal would increase tax revenues by $40.9 billion over 2014-2023.  These figures indicate the importance that like-kind exchanges have to the industry and the magnitude that the proposed repeal would have on it. 

b.  Repeal of historic tax credit (rehabilitation credit) – (Section 3223)

Current law

Current law provides an incentive, in the form of tax credits (“historic tax credits”), for the rehabilitation of old and historic buildings in a manner that preserves their historic character.  A 20% credit is available for qualified expenditures to rehabilitate a building that has been certified as historic; a 10% credit is allowed for rehabilitations of buildings first placed in service before 1936. 

Potential impact of proposed law

The Camp Proposal would repeal historic tax credits for amounts paid after 2014.  Under a transition rule, certified rehabilitations of buildings acquired before 2015 would continue to generate historic tax credits, but the credits would be limited to qualified rehabilitation expenditures incurred through the end of 2016. 

Potential impact of proposed law

The National Park Service recently estimated that more than 38,700 underutilized or vacant historic buildings have been rehabilitated since the historic tax credit program was initiated in 1976.  Tax credits are critical to historic rehabilitation projects because the cost of historic preservation – compared to new construction – is high; without the incentives that historic tax credits provide these projects become uneconomic.  The repeal of the historic tax credit program would likely be a significant setback to preservation of the nation’s historic properties. 

c.  Other real-estate related provisions

Other aspects of the Camp Proposal of particular concern to the real estate industry include:

  • 40-year depreciation (Section 3104).  The recovery period for all depreciable real property placed in service after 2016 – both residential rental property, currently depreciated over 27.5 years, and nonresidential real property, currently depreciated over 39 years (as well as any personal property which is real property with no class life, and currently is depreciated as Section 1245 property under MACRS) – would be extended to 40 years.  The special 15-year recovery period (that expired at the end of 2013) for qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property would not be renewed and such property would be depreciated under the regular rules.
  • Reinstatement of depreciation recapture (Section 3139).  Ordinary income recapture on the sale of depreciable real property (so-called Section 1250 property) would be re-instated.  Gain from the sale depreciable real property would be recaptured as ordinary income to the extent of depreciation claimed after 2014.  The special 25% capital gains tax rate for unrecaptured Section 1250 gain would be eliminated.
  • Carveout from carried interest provision (Section 3621).  The carried interest provisions of the Camp Proposal – which would recharacterize as ordinary income capital gain attributable to an “applicable partnership interest” transferred to the partner in connection with the performance of services – would not apply to carried interests in a partnership engaged in a real property trade or business.   

VI.       International provisions

a.  Exclusion of dividends from controlled foreign corporations (Section 3661)

Current law

In order to prevent the retention of corporate earnings, in addition to the regular corporate tax, a 20% tax is imposed on the passive income of certain corporations if five or fewer individuals own more than 50% of the corporation’s stock and more than 60% of the corporation’s income consists of certain types of passive income such as dividends, interest and royalties. Such tax will not apply to passive income that has been distributed as a dividend by the corporation.

Proposed law

Dividends received from a foreign subsidiary would not be subject to the additional 20% tax.

Potential impact of proposed law

This provision seems to be a welcome development for closely held corporations.  It is generally consistent with the modifications to the overall foreign income tax regime contained in the bill which are designed to move the US tax regime to a territorial tax regime wherein most income that does not have a US nexus is exempt from US tax.

b.  Prevention of avoidance of tax through reinsurance with non-taxed affiliates (Section 3701)

Current law

In general, insurance companies may deduct premiums paid for reinsurance.  Insurance income of a foreign-owned foreign company that is not engaged in a US trade or business is generally not subject to US income tax and are instead subject to a minimal excise tax.

Proposed law

US insurance companies would not be allowed to deduct reinsurance premiums paid to foreign related companies that are not subject to US taxation on the premiums, unless such foreign company elects to treat the income as effectively connected to a US trade or business and thus subject to US tax.  Because the provision is only intended to attack insurance regimes designed to achieve a tax shelter, this provision would be subject to a “high tax kick-out,” whereby the deduction for reinsurance premiums would be allowed if the foreign jurisdiction taxes the premiums at a rate equal to or greater than the US corporate tax rate.  To maintain consistency between income and deductions, insurance recoveries received by the US insurance company with respect to a reinsurance policy for which the premium deduction was disallowed would not be subject to US tax.

Potential impact of proposed law

The proposed provision would eliminate the material benefit enjoyed under many foreign insurance programs and would likely eliminate the market for these types of products, seriously impacting the players in this market, as well as the end users.

c.  Taxation of passenger cruise gross income of foreign corporations and nonresident alien individuals (Section 3702)

Current law

Income derived by a foreign person from the international operation of a ship is exempt from US tax if the country in which the person is a resident grants an equivalent exemption to US taxpayers.  If the income is not exempt from US taxation, a 4% US tax is imposed on US-source gross income from regularly scheduled shipping if the foreign person has a fixed place of business in the US that is involved in earning such income.

Proposed law

Whether or not the foreign country grants an equivalent exemption to US taxpayers, the income of foreign taxpayers derived from the operation of passenger cruise ships within US territorial waters would be subject to US tax.

In addition, the 4%  US tax on US-source shipping income would apply without regard to whether the shipping is regularly scheduled or the foreign person has a fixed place of business in the US.

Potential impact of proposed law

A disproportionate percentage of the passenger cruise ship market is US-based.  Cruise ship operators have been able to avoid US tax entirely by flagging their ships outside of the United States.  This provision would place an increased US tax burden on the cruise ship industry, but is unlikely to distort industry operations in any material fashion. 

d.  Restriction on insurance business exception to passive foreign investment company rules (Section 3703)

Current law

Shareholders that invest in a passive foreign investment company (PFIC) – defined as a foreign corporation that has at least 75% passive gross income and has assets at least 50% of which  produce passive income—are taxed currently on the earnings of the PFIC.  There is an exception, however, for a PFIC which is also an insurance company.  For such companies, passive income does not include income that is derived in the active conduct of an insurance business so long as the PFIC is predominantly engaged in an insurance business and would be taxed as an insurance company if it were it a US corporation.

Proposed law

Under the proposed provision, the requirements that the PFIC insurance company would need to satisfy would be expanded.  The insurance company exception would be amended to only apply if (1) the PFIC would be taxed as an insurance company were it a US corporation, (2) more than 50% of the PFIC’s gross receipts for the tax year consist of premiums and (3) loss and loss adjustment expenses, unearned premiums and certain reserves constitute more than 35% of the PFIC’s total assets.

Potential impact of proposed law

This provision would minimize the tax deferral available to investors in foreign insurance programs, seriously impacting the players in this market, as well as the end users.

e.  Modification of limitation on earnings stripping (Section 3704)

Current law

If a US corporation’s debt-to-equity ratio exceeds 1.5 to 1, deductions for interest payments to foreign related parties that are not subject to US tax are disallowed to the extent the taxpayer has “excess interest expense”.  Excess interest expense is net interest expense in excess of 50% of the US corporation’s adjusted taxable income.  If such deductions  are disallowed, they may be carried forward indefinitely.  “Excess limitations,” defined as the amount over 50% of the corporation’s adjusted taxable income over the corporation’s net interest expense, may be carried forward three years.

Proposed law

Corporations would no longer be permitted to carry forward any “excess limitation” and the threshold for “excess interest expense” would be reduced to 40% of adjusted taxable income.

Potential impact of proposed law

This provision would make it more difficult for foreign debt investment to be used to base erode active US operations.  Practically, however, it may incentivize creative planning to avoid lenders being treated as related parties.

f.  Limitation on treaty benefits for certain deductible payments (Section 3705)

Current law

In general, payments to foreign recipients of fixed or determinable, annual or periodical (FDAP) income such as interest, dividends, rents and annuities are subject to a 30% withholding tax.  The withholding tax may be reduced or eliminated, however, for payments between the US to residents of certain countries with which the US has an income tax treaty.

Proposed law

The withholding tax would not be reduced or eliminated if a payment of FDAP income is deductible in the US and the payment is made by an entity that is controlled by a foreign parent to another entity in a tax treaty jurisdiction that is controlled by the same foreign parent.  An exception would be provided for treaties that allow for the reduction of withholding tax for payments made directly to the foreign parent.

Potential impact of proposed law

This provision would de-incentivize creative structuring to facilitate deductible payments to unrelated parties and increase the overall US tax costs of foreign investment.

g.  Deduction for dividends received from foreign corporations (Section 4001)

Current law

Foreign income earned by a foreign subsidiary of a US corporation is generally not subject to US tax until the income is distributed as a dividend to the US corporation.  In order to offset US tax owed on foreign income and to mitigate the double taxation on earnings of the foreign corporation, the US allows a credit for foreign income taxes paid.   Alternatively, a US taxpayer may elect to deduct foreign income taxes paid rather than claim the credit.

Proposed law

A “dividend-exemption system” would replace the current system.  Instead, 95% of dividends paid by a foreign corporation to a US corporate shareholder that owns 10% or more of the foreign corporation would be exempt from US taxation.  Foreign tax credits and deductions would not be allowed for any foreign taxes paid or accrued with respect to exempt dividends.

Potential impact of proposed law

The goal of this provision is to enable US companies to better compete with foreign companies when selling products and services abroad.  In addition, it should incentivize US companies to repatriate foreign earnings.

h.  Limitation on losses with respect to specified 10% owned foreign corporations (Section 4002)

Current law

Gain that is recognized by a US parent corporation on the sale or exchange of its stock in a foreign subsidiary is generally treated as a dividend distribution by the foreign subsidiary to its US parent to the extent of earnings and profits (E&P) that have been accumulated by the foreign subsidiary while it had been owned by the US parent.  Instead of a US company operating a separate foreign subsidiary, it may operate businesses in foreign countries directly through a branch. In such situations, US companies pay US taxes on the foreign earnings or deduct losses on a current basis, as if earned directly by the US parent.

Proposed law

A US parent would reduce the basis of its stock in a foreign subsidiary by the amount of any exempt dividends received by the US parent from its foreign subsidiary. Such basis reductions would apply only for purposes of determining the amount of a loss (but not gain) on any sale or exchange of the foreign subsidiary stock by its US parent. In addition, if a US corporation transfers substantially all of the assets of a foreign branch to a foreign subsidiary, the US corporation would be required to recapture the amount of any post-2014 losses that previously were incurred by the branch to the extent the US corporation receives exempt dividends from any of its foreign subsidiaries.

Potential impact of proposed law

Both the basis reduction rule and the recapture provision are not so much changes to the current regime as they are components of the new regime.  The basis reduction rule is designed to ensure that exempt dividends do not trigger a double tax benefit in the form of a loss on disposition of shares in the foreign corporation.  The loss recapture is an expansion of the current branch loss recapture rule and achieves a similar goal as the basis reduction rule.  Taxpayers should not be able to benefit from deductible “ramp up costs” only to transfer a business offshore when it becomes profitable, to take advantage of the new “participation exemption” regime.  To combat this potential “double” benefit, the recapture provision ensures that “ramp up” costs are recaptured into income to the extent of previously received exempt dividends.

i.  Treatment of deferred foreign income upon transition to participation exemption system of taxation (Section 4003)

Current law

As stated under Section 4001, foreign income earned by a foreign subsidiary of a US corporation is generally not subject to US tax until the income is distributed as a dividend to the US corporation.  In order to offset US tax owed on foreign income and to mitigate the double taxation on earnings of the foreign corporation, the US allows a credit for foreign income taxes paid.  

Proposed law

US shareholders owning at least 10% of a foreign subsidiary would include in income for their last tax year beginning before 2015 their pro rata share of the post-1986 historical E&P of the foreign subsidiary to the extent such E&P has not been previously subject to US tax.  The E&P would be bifurcated into E&P retained in the form of cash, cash equivalents or certain other short-term assets, and E&P that has been reinvested in the foreign subsidiary’s business (property, plant and equipment). The portion of the E&P that consists of cash or cash equivalents would be taxed at a special rate of 8.75%, while any remaining E&P would be taxed at a special rate of 3.5%. Foreign tax credits would be partially available to offset the US tax.  The provision provides for netting of E&P for the purpose of calculating the tax if a US shareholder owns two corporations, one with positive E&P and one with an E&P deficit.

The US shareholder could elect for the tax liability to be payable over a period of up to eight years, based on a schedule of 8% of the net tax liability in each of the first 5 years; 15% in the sixth year; 20% in the seventh year; and 25% in the eighth year.

Shareholders of S Corporations that are US shareholders are eligible to elect to defer the payment of the tax liability with respect to the S Corporation, until the S corporation ceases to be an S corporation, sells substantially all of its assets, is liquidated, ceases to exist or conduct business or transfers its stock.

Potential impact of proposed law

The goal of this provision is to eliminate the need for US companies to separately track E&P accumulated by their foreign subsidiaries prior to the “dividend exemption system,” so that all distributions from foreign subsidiaries would be treated in the same manner as if they were under the US system.  In addition, the provision should reduce the tax burden on illiquid accumulated E&P that has been reinvested in the business of the foreign subsidiary.

j. Look-thru rule for related controlled foreign corporations made permanent (Section 4004)

Current law

A US parent is generally subject to current US tax on certain types of passive income earned by its foreign subsidiary such as dividends, interest, royalties and rents, regardless of whether the foreign subsidiary distributes such income to the US parent. For certain tax years, however, a “look-through” rule provides that passive income received by one foreign subsidiary from a related foreign subsidiary generally is not includible in the taxable income of the US parent, so long as such income was not subject to current US tax or effectively connected with a US trade or business.

Proposed law

The look-through rule would be made permanent.

Potential impact of proposed law

This provision is consistent with the move to a territorial regime and the exemption of foreign income from US tax.

k.  Repeal of section 902 indirect foreign tax credits; determination of section 960 credit on current year basis (Section 4101)

Current law

A US parent corporation is subject to US tax on “subpart F income”—certain foreign income of its foreign subsidiaries—even if the income is not repatriated to the US parent. A US parent corporation generally may claim a credit for foreign taxes paid on the subpart F income.

Proposed law

The foreign tax credit or deduction would not be allowed for any taxes paid or accrued with respect to any dividend to which the dividend exemption under section 4001 would apply. A foreign tax credit would be allowed for subpart F income that is included in the income of the US shareholder on a current year basis, without regard to pools of foreign earnings kept abroad.

Potential impact of proposed law

This provision is consistent with the substantial elimination of tax on foreign corporate dividends.

l.  Foreign tax credit limitation applied by allocating only directly allocable deductions to foreign source income (Section 4102)

Current law

Certain expenses incurred by a US parent of a foreign subsidiary that are not directly attributable to income earned by the foreign subsidiary must be allocated against foreign-source income for purposes of calculating the US parent’s foreign-source income, thus reducing the amount of foreign tax credits available to a US parent to reduce its US tax on foreign source income.

Proposed law

Only expenses that are directly attributable to income earned by a foreign subsidiary would be allocated against foreign-source income for purposes of calculating the US parent’s foreign-source income and the amount of foreign tax credits the US parent may use to reduce its US tax on foreign-source income.

Potential impact of proposed law

This provision is consistent with the substantial elimination of tax, and elimination of foreign tax credits, with respect to foreign corporate dividends.

m.  Passive category income expanded to include other mobile income (Section 4103)

Current law

Income earned by foreign subsidiaries is categorized as either active or passive income and foreign taxes paid on the income are separated into active and passive baskets. Only foreign taxes paid on passive income (e.g. dividends, rents, royalties, capital gains, etc.) may be taken into account in determining the amount of foreign tax credits that may be claimed against US tax on passive income.

Proposed law

The use of foreign tax credits would be restricted to two baskets: mobile and active. The mobile basket would include certain related-party sales income, foreign intangible income and current-law passive income. The active basket would include all other income.

Potential impact of proposed law

This provision is consistent with the changes to the taxation of Subpart F income discussed further below.

n.  Source of income from sales of inventory determined solely on basis of production activities (Section 4104)

Current law

In determining the source of income for foreign tax credit purposes, up to 50% of the income from the sale of inventory property that is produced within the US and sold outside the US (or vice versa) may be treated as foreign-source income, even though the production activity takes place entirely within the US.

Proposed law

Under the provision, income from the sale of inventory property produced within and sold outside the US (or vice versa) would be allocated and apportioned between sources within and outside the US solely on the basis of the production activities with respect to the inventory.

Potential impact of proposed law

This provision is designed to limit the availability of foreign tax credits for the offshore sale of products manufactured in the United States.  This would increase the tax burden of US manufacturers and incentivize the sale of such products via local incorporated distributors.

o.  Subpart F income to only include low-taxed foreign income (Section 4201)

Current law

A US parent is subject to current US tax on subpart F income (e.g. dividends, interest, rents, royalties, income from certain related-party sales or services transactions, etc.)  of its foreign subsidiary, regardless of whether the income is distributed to the US parent. If, however, the subpart F income has been taxed at a rate that is at least 90% of the US tax rate (i.e., 31.5% for C corporations), then the US parent may elect to treat that income as non-subpart F income.

Proposed law

Under the provision, the 90% threshold for treating foreign income as subpart F income would be increased to 100% (i.e., 25% for C corporations) for foreign personal holding company income. For foreign base company sales income, however, the threshold would be reduced to 50% of the US rate (i.e., 12.5% for C corporations) and to 60% of the US rate (i.e., 15%) for foreign base company intangible income. Such treatment would no longer be elective.

Potential impact of proposed law

Because the increase in the high tax threshold for subpart F income other than foreign base company sales income would be coupled with the reduction of the US corporate income tax rate, the net impact of this change would be to increase the availability of the “high tax kickout” as the provision is known under current law.  The reduction of the threshold for foreign base company sales income would further enhance taxpayer’s ability to earn sales income in foreign jurisdictions without incurring subpart F income.

p.  Foreign base company sales income (Section 4202)

Current law

A US parent is subject to current US tax under subpart F on income earned by its foreign subsidiary from certain related-party sales transactions (“foreign base company sales income” or FBCSI), regardless of whether the foreign subsidiary distributes such income to the US parent. In general, FBCSI is income earned by a foreign subsidiary from buying or selling personal property from or to, or on behalf of, related persons if the property is (1) manufactured, produced, grown or extracted outside of the country in which the foreign subsidiary is organized and (2) used, consumed or disposed of outside of such country.

Proposed law

Under the provision, FBCSI no longer would include income earned by a foreign subsidiary that is incorporated in a country that has a comprehensive income tax treaty with the US, or to income that has been taxed at an effective tax rate of 12.5% or greater.

Potential impact of proposed law

This provision would further enhance the ability of taxpayers to earn sales income offshore without incurring subpart F income.

q.  Inflation adjustment of de minimis exception for foreign base company income (Section 4203)

Current law

A US parent of a foreign subsidiary is subject to current US tax under subpart F on FBCSI and foreign income from issuing (or reinsuring) insurance or annuity contracts, regardless of whether the foreign subsidiary distributes such income to the US parent. There is a de minimis rule, however, that states that if the gross amount of such income is less than the lesser of 5% of the foreign subsidiary’s gross income or $1 million, then the US parent is not subject to current US tax on any of the income.

Proposed law

The $1 million threshold would be adjusted for inflation.

Potential impact of proposed law

This provision would provide a further, modest enhancement to the ability of taxpayers to earn sales income offshore without incurring subpart F income.

r.  Active finance exception extended with limitation for low-taxed foreign income (Section 4202)

Current law

A US parent is subject to current US tax under subpart F on “foreign personal holding company income” (i.e., dividends, interest, royalties, rents and other types of passive income earned by its foreign subsidiary regardless of whether the foreign subsidiary distributes such income to the US parent. However, for certain tax years, there is an exception for such income if it is derived in the active conduct of a banking, financing or similar business, or in the conduct of an insurance business (“active financing income”).

Proposed law

The exception would be extended for five years for active financing income that is subject to a foreign effective tax rate of 12.5% or higher. Active financing income that is subject to a lower foreign tax rate would not be exempt, but would be subject to a reduced US tax rate of 12.5%, before the application of foreign tax credits.

Potential impact of proposed law

This provision would extend the current active financing exception in a modified form.

s.  Sec. 4205. Repeal of inclusion based on withdrawal of previously excluded subpart F income from qualified investment (Section 4205)

Current law

Foreign shipping income earned between 1976 and 1986 was not subject to current US tax under subpart F if the income was reinvested in certain qualified shipping investments. Such income becomes subject to current US tax in a subsequent year to the extent that there is a net decrease in qualified shipping investments during that subsequent year.

Proposed law

The imposition of current US tax on previously excluded foreign shipping income of a foreign subsidiary if there is a net decrease in qualified shipping investments would be repealed.

Potential impact of proposed law

This provision is consistent with the substantial elimination of tax on foreign corporate dividends.

t.  Sec. 4211. Foreign intangible income subject to taxation at reduced rate; intangible income treated as subpart F income (Section 4211)

Current law

Income earned by a US parent directly for the use of its intangibles exploited abroad, usually in the form of royalties, is subject to US tax upon receipt of the income. However, if its foreign subsidiary owns intangible property in a foreign jurisdiction, the US parent may generally allocate substantial profits to the foreign subsidiary without violating the subpart F rules and defer US tax on those profits until they are distributed to the US parent.

Proposed law

A US parent of a foreign subsidiary would be subject to current US tax on a new category of subpart F income, “foreign base company intangible income” (FBCII). FBCII would equal the excess of the foreign subsidiary’s gross income over 10% of the foreign subsidiary’s adjusted basis in depreciable tangible property (excluding income and property that are related to commodities).  The US parent could claim a deduction equal to a percentage of the foreign subsidiary’s FBCII that relates to property that is sold for use, consumption or disposition outside the US or to services that are provided outside the US. The deduction also would be available to US corporations that earn foreign intangible income directly (rather than through a foreign subsidiary).  The deductible percentage of FBCII and foreign intangible income would be 55% for tax years beginning in 2015 and would phase down to 52% in 2016, 48% in 2017, 44% in 2018 and 40% for tax years beginning in 2019 or later.

Potential impact of proposed law

The goal of this provision is to prevent base erosion of US tax base, remove tax incentives to locate intangible property in low-tax or no-tax jurisdictions by providing neutral tax treatment of income attributable to intangible property, whether or not such property is located within or outside the United States, and to provide a reduced US tax rate on such income.

u.  Denial of deduction for interest expense of US shareholders which are members of worldwide affiliated groups with excess domestic indebtedness (Section 4212)

Current law

Corporations may generally deduct all of their interest expense even if the debt was acquired to capitalize foreign subsidiaries. Expense allocation rules, however, may require the interest expense to be allocated against foreign source income, which may limit the amount of foreign tax credits the US parent may utilize.

Proposed law

The deductible net interest expense of a US parent of one or more foreign subsidiaries would be reduced by the lesser of the amount derived by multiplying  (1) the net interest expense of such corporation, by (2) the ratio that such interest expense bears to the amount by which indebtedness of the US parent (and other members of the US consolidated group) exceeds an amount equal to 110% of the amount which the total indebtedness of the US consolidated group would be if the ratio of such indebtedness to the total equity of the domestic corporation was the same as the ratio of the total debt of the entire group (including both related domestic and foreign corporations) to the total equity of the entire group (including both related domestic and foreign corporations) or (2) the amount by which net interest expense exceeds 40% of the adjusted taxable income of the US parent.  Disallowed interest expenses could be carried forward to a subsequent tax year.

Potential impact of proposed law

The goal of this provision is to discourage excessive leverage directly in conjunction with the adoption of a dividend-exemption system and to prevent US companies from generating excessive interest deductions in the US on debt that is incurred to produce exempt foreign income in a dividend-exemption system.  In addition, the provision seeks to benefit US corporations by allowing the US group to have 10% more leverage than the worldwide group, and providing an indefinite carryforward of disallowed interest expense.

TAKE PART IN THE DEBATE

The Camp proposal is complex and will require taxpayers to undertake a thorough analysis of its potential impact on their operations, especially the tradeoffs between lower rates and current law tax expenditures and the changes to the international tax system.

DLA Piper will continue to analyze the impact of this and other reform proposals that are expected to be debated in the coming months.  We look forward to working with you both to analyze the impact of the proposals and the politics of tax reform, and to assisting you in making your views known to policymakers.

 

Topics:  Charitable Donations, Energy Tax Incentives, Income Taxes, Tax Deductions, Tax Reform

Published In: General Business Updates, Finance & Banking Updates, International Trade Updates, Securities Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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