www.qns.com I LIC COURIER I APRIL 2018 43
TAX TIPS
The New
Tax Law
e new tax law was enacted at warp speed. President
Trump signed the legislation on December 22, 50 days aer
a bill was rst introduced in the House. So, it’s no surprise
that it’s full of slipups, snafus and draing mistakes
unintended by taxwriters.
Congressional GOPers want to x the errors by passing
what are called technical corrections. But Democrats may
not be keen to go along. ey’re loath to give Trump
another legislative victory when it comes to tax changes.
Also, Republicans can’t use the same budget reconciliation
procedures to bypass the 60-vote requirement in the Senate
that they used to pass the package.
at doesn’t mean Republicans won’t try. Sta members
are draing language with the hope that they can attach it to
this month’s spending bill or another vehicle in order to
rally some Democratic votes. Chances of success are
uncertain at this time.
We’ll discuss some of the mistakes in the law.
Let’s start with depreciation for restaurant, retail and
leasehold remodeling. It’s now consolidated under the
grouping of qualied improvement property (QIP).
Congressional Republicans intended to give QIP a 15-year
depreciable life and to make it eligible for 100% bonus
depreciation. But the new statutory language doesn’t’ reect
this intent, accidentally making QIP ineligible for bonus
depreciation.
e rule barring net operating loss carrybacks contains an
oversight. e statutory language says that the general
prohibition on NOL carrybacks applies to NOLs arising in
tax years ending aer December 31, 2017, while the
conference committee used an eective date for NOLs
arising in years beginning aer December 31, 2017. e law
as currently written allows calendar-year lers to carry back
2017 losses, but scal-year taxpayers with 2017 losses are
prohibited from doing the same.
ere’s a big loophole in the tax treatment of hedge fund
managers. e new law requires fund managers who take a
share of partnership prots as compensation for services to
hold their partnership interest for at least three years for the
prots to be long-term capital gains. e law exempts
partnership interests held by corporations, and fund
managers say that includes S corporations. However, the
Revenue Service recently announced that it will issue
regulations to clarify that the exemption applies only to C
corporations. Some tax advisers question whether IRS has
overstepped, saying that only Congress can x this.
John Savignano is a partner with Savignano Accountants & Advisors
located at 47-46 Vernon Blvd., Second Floor, in Long Island City. If you
have any questions or require additional information, please call John
at 718-707-0955.
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