Reed Smith Client Alerts

On December 22, 2017, President Trump signed into law H.R. 1, the “Tax Cuts and Jobs Act.” The Act, which the House and Senate both passed two days earlier, heralds the most expansive and significant tax legislation enacted in the United States since 1986. The wide-reaching legislation – which generally will apply to taxable years beginning after December 31, 2017 – permanently reduces the U.S. corporate income tax rate to 21 percent; creates a new – albeit temporary – schedule of lower individual marginal tax rates; eliminates, limits and/or modifies many corporate, pass-through and individual tax deductions, credits and expenses; dramatically expands the estate and gift tax exemptions; converts the United States to a territorial tax system with significant new barriers to moving operations and payments out of the United States; and imposes a one-time toll charge on offshore earnings, among its many changes.

All individuals, pass-through entities (such as partnerships, LLCs, and S corporations) and corporations will be affected by this new tax legislation: the timing of income recognition, the ability to claim many deductions, and the treatment of certain expenses are just some of the many, and often complex, changes that taxpayers will face starting January 1, 2018.

This Alert provides a high-level overview of the most significant changes for corporations, partnerships, taxpayers with international operations, and individual taxpayers (including changes to estate and gift taxes). The Alert also highlights some key planning opportunities available only until December 31, 2017.

Mark Your Calendars! January 1, 2018 will mark a new era in U.S. tax planning and compliance. Because of the historical nature of this legislation, Reed Smith in the coming weeks will be hosting a series of programs to explain key provisions in the new U.S. tax code, and how all taxpayers can best plan for these changes.