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House and Senate Reconcillation "Compromise" Reached

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  • House and Senate Reconcillation "Compromise" Reached

    https://www.nytimes.com/2017/12/13/us/politics/tax-bill-republicans-deal.html

     

    AMT is still there, they threw in a 10 grand deduction for SALT and property taxes, and it looks like small business pass through income is getting more favorable treatment.  Sounds like incorporating might hold some benefits depending on how the final wording works out.

  • #2



    Read that carefully:  "The conference version will apply to even fewer taxpayers than the Senate bill would have, the congressional aide said."  So, individual AMT is still there, but possibly reduced even more.  I'm anxious to see the final numbers.

    Comment


    • #3






      Read that carefully:  “The conference version will apply to even fewer taxpayers than the Senate bill would have, the congressional aide said.”  So, individual AMT is still there, but possibly reduced even more.  I’m anxious to see the final numbers.
      Click to expand...


      The devil really is in the details.

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      • #4
        The senate bill individual AMT was killer.  Literally wiped out most of the benefit of the reduced rates and better brackets.  How much it's been "reduced" could mean the difference between this bill remaining a loser or becoming a winner again.

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        • #5
          Sounds like they still haven't decided what to do exactly with the SALT issue...they are debating on letting there be options for deducting either income tax or property tax, but not both.

          "There were a couple of issues on SALT that we were trying to fix," Sen. John Thune (R-S.D.) said. "One was states that maybe want to take income or sales instead of property. So we’ve tried to create in the final agreement some optionality there."

          https://www.politico.com/story/2017/12/13/tax-reform-deal-compromise-plan-294972

          Allowing the 10k of state income tax deduction for me would be a potential help.  I might be able to do better than the standard 24k deduction if I can still deduct 10k of state income tax in addition to the mortgage interest deduction.  Won't know though until we see the final numbers.

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          • #6
            As far as pass through entities are concerned, has anyone seen anything written about the reconciled bill regarding “service business” exclusion or not? In my opinion, this would be the biggest make or break for physicians in the bill.

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            • #7
              This is totally BS they can't find a way to get rid of individual AMT.   We're not talking about huge revenue savings here.  It has been a rallying cry for decades.

              I fear they will just further increase the AMT exemption, still leaving those in the 300k-600k MFJ income range in high tax states still screwed but those over 1M now a little better off with the top marginal rate down to 37%.

              This sucks.

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              • #8
                To brighten a few people's evening.  Larry Kudlow reporting that FIFO cost basis requirement has reportedly been stripped from the final bill.  A big deal for people on this forum for sure.

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                • #9
                  More good news folks.  Politico reporting that if individual AMT stays (likely), the exemption will be massively lifted to 500k/1M (hopefully indexed to inflation).  Much better.  Most docs (even with high earning spouses) should be able to avoid now, even if it takes some extra deferral of income to get there.  Still not right for the people who have to pay it though.  We have to be careful to avoid the mindset of feeling good when we personally avoid getting screwed, while other people are still getting abused.

                  Interestingly, just like current AMT, this may actually set up a sweet spot for very high earners to selectively accelerate income at the flat 28% AMT rate before they go above the AMT.  Heck they may even decide to lower the flat AMT rates.  Will be eagerly awaiting the Kitces strategy article on this one.

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                  • #10
                    Thanks for the two updates Gipper.  These are both very important to many of us.  The FIFO requirement was crazy and over the long term would have been so easy to work around (but at the cost of more complicated portfolios).

                    A $1M AMT exemption in place of the proposed $109K would indeed be a game changer.  It would bring the AMT back to what it was originally designed to do.

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                    • #11
                      We should keep AMT.

                      And get rid of the entire, other, stupid, loophole/deduction/credit-ridden tax code that takes an entire weekend every spring to navigate.

                      Isn’t AMT the nearly flat tax with few exemptions that lawmakers have claimed is their goal?

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                      • #12




                        Politico reporting that if individual AMT stays (likely), the exemption will be massively lifted to 500k/1M (hopefully indexed to inflation).
                        Click to expand...


                        Do you have a link to this?  I searched their website and couldn't find it.  Thanks.

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                        • #13
                          https://www.politico.com/amp/story/2017/12/13/tax-reform-deal-compromise-plan-294972

                          Yee of little faith. Other Hill reporters like the reliable Richard Rubin also supporting

                          But caution...nothing is final till everything is final.

                          Collins, Corker, & Rubio could still stall bill with their demands and require more tweaking.

                          Comment


                          • #14




                            More good news folks.  Politico reporting that if individual AMT stays (likely), the exemption will be massively lifted to 500k/1M (hopefully indexed to inflation).  Much better.  Most docs (even with high earning spouses) should be able to avoid now, even if it takes some extra deferral of income to get there.  Still not right for the people who have to pay it though.  We have to be careful to avoid the mindset of feeling good when we personally avoid getting screwed, while other people are still getting abused.




                            I'm not following.  Isn't almost everyone with an income above $500k going to pay higher rates with the regular non-AMT tax?  Unless the AMT rate gets a lot higher than the current max 28%.

                            I sometimes have trouble reading private messages on the forum. I can also be contacted at [email protected]

                            Comment


                            • #15
                              @Lithium

                              I am by no means that knowledgeable with AMT tax crossover points, and it is my understanding that it can vary significantly, based on individual circumstances BUT...

                              playing around with TurboTax 2016 #s, my crossover out of AMT into regular tax happened at about $608,000 MFJ. Yours might be totally different.

                              Perhaps 500k/1M AMT exemption is overkill, but crossover point could also go up with lowering of the individual brackets??

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