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Old 12-20-2017, 04:26 PM   #441
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Thanks, just what I needed to confirm that sole proprietor landlords get the 20% pass-through business deduction. For me, this more than makes up for the limit on SALT deductions, and (because of reduced taxable income) might allow me to continue doing Roth conversions going forward.
This is a small bonus to me too, as I'm in a mult-member LLC generating real estate income from a building owned by family members. But despite having a high rent roll, the income (after real estate expenses) spit 3 ways on our K-1s is modest so the deductions will be modest too -- it will barely exceed the loss of the personal exemptions -- had they made this deduction a below the line deduction with a straight hit before you get to AGI this would have been more helpful for conversions and for Medicare IRMAA payment tiers.
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Old 12-20-2017, 04:30 PM   #442
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Makes sense. Deferred income taxes are based on stautory tax rates... I can see that wit the signing being so late that it might throw some chaos into corporate year ends (and quarter ends for fiscal year companies). But I would think that the net impact will be quite positive as deferred tax liabilities previously computed based on 35% are recomputed at 21%.... so all else being equal a $1 billion deferred tax liability will become $600 million, releasing $400 million to earnings and equity. That's a big deal.
And what about deferred tax assets? They have to be written down. No?
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Old 12-20-2017, 05:01 PM   #443
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And what about deferred tax assets? They have to be written down. No?
Yes the most common are warranties and tax loss carryforwards, these will all be worth less in the future causing those to be written down.
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Old 12-20-2017, 05:08 PM   #444
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From a quick Google, Sunday's do not count. And if congress adjourns before those 10 days, it becomes a "Pocket Veto" and dies. So when does Congress adjourn for the year? I think Congress is already on an extension to the original schedule meaning the Pres needs to sign now before they adjourn for the year. Jan 3rd starts a new "Session". Can this be right? Sorry, I'm poor on congressional procedures.
thisvstuff is so arcane who knows what’s up. If Sundays don’t count we would get to the beginning of the year. If they don’t enroll the bill and send it today maybe we get another day. A new session of Congress doesn’t start until the new Congress is elected next year.
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Old 12-20-2017, 05:12 PM   #445
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You may be losing the $8100 exemption, but you are gaining a $500 credit for every adult dependent in the house hold. So, $8100 x .12=$972 under old law, 2 x$500= $1000, so almost a wash.

Child tax credit is $2000 each but is decreased depending on income. AND only a portion of that is refundable in cash or refund.

https://www.nytimes.com/interactive/...bill-cuts.html
The taxpayer (and spouse taxpayer if MFJ) are never considered "dependents" and don't qualify for the $500 credit. If you have older kids in college or perhaps support a parent that you can claim as a dependent - those would count for the credit.
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Old 12-20-2017, 05:14 PM   #446
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Yes the most common are warranties and tax loss carryforwards, these will all be worth less in the future causing those to be written down.
That's what I thought. So it's not all positive. Depending on the specific make-up of each company's tax balance sheet, this could also have a large negative P&L impact for 2017.
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Old 12-20-2017, 05:18 PM   #447
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That's what FOX Business news said just now. That Trump might not sign the bill until Tuesday because of the inability to get a copy of it to him quickly. Yet Trump previously said he wanted to sign it before Christmas, so it would be a Christmas gift.

I actually heard someone say they might wait until Jan 1st for some strange reason I did not get... also did not go back to listen to it again as I really did not care...
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Old 12-20-2017, 05:25 PM   #448
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My “postcard” for next year:
Pension $22,121
Pension $12,671
Interest $540
Total Income $35,332
Standard Deduction $24,000
Taxable Income $11,332
Tax $1,133

Nothing else in this thread is applicable to me.
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Old 12-20-2017, 05:28 PM   #449
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Way too much to read every post IMO...

But, I saw where there was a comment on what is going to happen to companies with the new tax rate...

Well, one commentator said that some will take a huge hit as they now have to write down their deferred taxes based on the new tax rate... I think they said one company will have to book $2 bill expense...
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Old 12-20-2017, 05:29 PM   #450
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And what about deferred tax assets? They have to be written down. No?
Yes, because the tax benefits will be lower at 21% than at 35% so they a less valuable.
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Old 12-20-2017, 05:29 PM   #451
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I see the bill includes a proviso which abolishes the mandate that all citizens must have have hc insurance in 2019. The talking heads are all saying this will result in higher hc premiums going forward. Wondering what will happen to hc subsidies?
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Old 12-20-2017, 05:52 PM   #452
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Assuming that the bill gets to Trump's desk today, It looks like he will sign it on Jan 1st. If done before then, Paygo cost cutting is in effect on Jan 1st 2018. I don't think Trump wants that. If signed after Dec 31st, then that cost cutting is delayed until Jan 1 2019.

It looks like the next Congressional session starts on Jan 3rd so this session must be over by the end of Jan 2nd. Jan 2nd would be day 11 which, if not signed by then, the law gets automatically passed, unless Congress adjourns before then. I'm sure Trump wants to formally sign this bill. At the latest, he would sign it on Jan 2nd only if the bill doesn't get to his desk today.
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Old 12-20-2017, 05:53 PM   #453
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I see the bill includes a proviso which abolishes the mandate that all citizens must have have hc insurance in 2019. The talking heads are all saying this will result in higher hc premiums going forward. Wondering what will happen to hc subsidies?
Subsidies will go up but unsubsidized policies will become more unaffordable encouraging healthy people to to risk forgoing insurance leading to ever higher rates. It’s called adverse selection. Most HC gurus say it will raise premiums maybe 20% but not kill the markets. We shall see.
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Old 12-20-2017, 06:01 PM   #454
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The taxpayer (and spouse taxpayer if MFJ) are never considered "dependents" and don't qualify for the $500 credit. If you have older kids in college or perhaps support a parent that you can claim as a dependent - those would count for the credit.
I stand corrected; I believe it was in the initial House version.
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Old 12-20-2017, 06:10 PM   #455
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...one commentator said that some will take a huge hit as they now have to write down their deferred taxes based on the new tax rate... I think they said one company will have to book $2 bill expense...
According to this story, there's a long list of companies who will take a huge hit to profit due to revaluation of deferred tax assets, led by Citigroup at $23B, whose regulatory capital may be affected as well. GM is $14B. AIG and BOA, $8B.

It's a non-cash, non-recurring write-down that's offset with real tax savings in the future. So this will probably get largely ignored by most investors and analysts. Although some companies may take multiple years of tax savings to offset the revaluation. So those could be negatively impacted assuming it's not already baked in.
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Old 12-20-2017, 06:17 PM   #456
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According to this story, there's a long list of companies who will take a huge hit to profit in 2017 due to revaluation of deferred tax assets, led by Citigroup at $23B, whose regulatory capital may be affected as well. GM is $14B. AIG and BOA, $8B.

It's a non-cash, non-recurring write-down that's offset with real tax savings in the future. So this will probably get largely ignored by most investors and analysts. Although some companies may take multiple years of tax savings to offset the revaluation. So those could be negatively impacted assuming it's not already baked in.
There is no real “hit” to earnings. Yes it must be reported in the official earnings but that will be a one time shot to revalue the balance sheet. Those companies you all listed all had extremely large loss carryforwards from prior years where they almost went belly up. In many cases the value is only in potential of being bought out and acquiring company could use to offset their income. But the income affect was in applying against future income to pay no taxes and that remains the same. Asset gets written off but there is no real effect. They do not benefit from the lower tax rate until they have gotten rid of all their old losses.
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Old 12-20-2017, 06:27 PM   #457
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Pundits are saying that Avoiding a PAYGO fight (the rules will force a cut in Medicare and other programs in 2018 if the bill is signed now unless Congress approves a waiver) may be motivating the talk about a signing delay. The cuts and the fight won’t take place until 2019, after the midterms, if it is signed in January.
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Old 12-20-2017, 06:39 PM   #458
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Assuming that the bill gets to Trump's desk today, It looks like he will sign it on Jan 1st. If done before then, Paygo cost cutting is in effect on Jan 1st 2018. I don't think Trump wants that. If signed after Dec 31st, then that cost cutting is delayed until Jan 1 2019.

It looks like the next Congressional session starts on Jan 3rd so this session must be over by the end of Jan 2nd. Jan 2nd would be day 11 which, if not signed by then, the law gets automatically passed, unless Congress adjourns before then. I'm sure Trump wants to formally sign this bill. At the latest, he would sign it on Jan 2nd only if the bill doesn't get to his desk today.
I am sure that if they want to wait to sign they can hire a very slow delivery person...


He can still claim that you got a tax cut for Christmas...
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Old 12-20-2017, 06:47 PM   #459
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There is no real “hit” to earnings. Yes it must be reported in the official earnings but that will be a one time shot to revalue the balance sheet. Those companies you all listed all had extremely large loss carryforwards from prior years where they almost went belly up. In many cases the value is only in potential of being bought out and acquiring company could use to offset their income. But the income affect was in applying against future income to pay no taxes and that remains the same. Asset gets written off but there is no real effect. They do not benefit from the lower tax rate until they have gotten rid of all their old losses.
That is debatable.... the earnings will be hit by the write off... and it will affect the capital of the firm... they had an 'asset' on their books (in the liability section IIRC) that they do not have going forward... this was booked in prior years that increased their income when it happened...

Now, I will agree it is nothing to do with operating income and most people will ignore it, but if your capital goes down and it affects other things it might be a problem... I do not know how much excess capital Citi has....
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Old 12-20-2017, 06:55 PM   #460
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There is no real “hit” to earnings. Yes it must be reported in the official earnings but that will be a one time shot to revalue the balance sheet. Those companies you all listed all had extremely large loss carryforwards from prior years where they almost went belly up. In many cases the value is only in potential of being bought out and acquiring company could use to offset their income. But the income affect was in applying against future income to pay no taxes and that remains the same. Asset gets written off but there is no real effect. They do not benefit from the lower tax rate until they have gotten rid of all their old losses.
I've always thought that so-called "one-shots" should not be so easily dismissed. These companies all took credits to the P&L as they accumulated these deferred tax assets. Were those credits dismissed? No. So why should the write-off?
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