August was a Big Month for Tax Reform Guidance

Proposed regulations issued to implement several key provisions of the Tax Cuts & Jobs Act were issued by Treasury and IRS in August.

199A Proposed Regulations

Treasury and the IRS released long-awaited IRC § 199A proposed regulations, REG-107892-18, on August 8, 2018. The regulations will not officially apply until they are adopted as final; however, taxpayers can rely on them until final rules are adopted. Read our summary of significant highlights from the proposed regulations. 

Bonus Depreciation Proposed Regulations

On August 3, IRS issued proposed regulations, REG-104397-18, to detail how bonus depreciation (the additional first- year depreciation deduction) under IRC § 168(k) should work in light of changes made by the Tax Cuts and Jobs Act. PL 115-97. Read our overview of this guidance here.

Proposed Regs to Eliminate SALT Deduction Cap Workaround Have Broader Impact

On August 23, 2018, IRS issued REG-112176-18, proposed regulations intended to stop states from establishing charitable contribution/tax credit schemes to get around the new $10,000 limit on deductions for state and local taxes. The proposed regulations also reach some longstanding state credit programs designed to encourage charitable contributions for purposes such as school tuition. Read our summary of these proposed regulations here.

Notice 2018-70 Clarifies Definition of Qualifying Relative

On August 28, 2018, IRS issued Notice 2018-70 to clarify the definition of a “qualifying relative" for purposes of the $500 credit and head of household status. Specifically, the Notice provides that the reduction of the personal exemption amount to zero won’t be considered for purposes of the $500 credit and head of household filing status. Instead, the exemption amount for the application of these provisions will be treated as $4,150. Continue reading here.

USDA Issues Details of New Payment Program

On August 27, 2018, Secretary of Agriculture Sonny Perdue announced details of new programs designed to assist farmers in response to ongoing trade disputes. USDA will authorize $12 billion for three primary programs:

• FSA will administer the new Market Facilitation Program to provide payments to corn, cotton, dairy, hog, sorghum, soybean, and wheat producers, beginning as early as September 4, 2018.
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• The Agricultural Marketing Service will administer the Food Purchase and Distribution Program to purchase the unexpected surplus of affected commodites.
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• The Trade Promotion Program is designed to restore lost markets and develop new export markets for U.S. farm products.

For more information on these new programs, particularly the Market Facilitation Program, click here.

Corporate Veil Pierced Where Owner was Sloppy with Finances

It is generally advisable for business owners to form a separate legal entity to limit personal liability stemming from business contracts or torts. Incorporating or organizing as an LLC can limit owners’ personal liability to the extent of their investments. This liability shield, however, is not without exception. In a recent case from the Iowa Court of Appeals, a plaintiff was able to “pierce the corporate veil” in an attempt to collect on a $410,067 breach of contract judgment. The case provides a good reminder to business owners that they must truly follow statutory requirements for maintaining a true business or they will not receive the protections of those laws.

To continue reading, click here.