~~With President-elect Trump, the chances of major tax reform in 2017 is extremely high. Congressman Ryan of Wisconsin the current Speaker of the House is committed to tax reform and President-elect Trump tax package is based in many ways on the Republican House proposal released earlier this year. If we do get tax reform, here is a list of the items that may happen:
•Repeal of the estate tax (both Trump and republicans want this). However, for estates over $10 million, they may lose the ability to step up the cost basis. For farmers with large amounts of farm land, this may not be a big deal, but on other assets, this can be costly. Also, many states will continue to keep their estate taxes, so many farmers will still not be clear of them.
•Repeal of the proposed 2704 Regulations on discounts for transfers of farms to the next generation. This would be good news. However, if the estate and gift tax is repealed, this may become a moot point anyway.
•The new Section 385 rules on debt/equity are likely eliminated or changed dramatically.
•Possible repeal of the net investment income tax. However, they will need to pay for some of these changes, so this tax may stick around. I think they will reduce "income taxes" but many of the other "non-income taxes" may stay the same or go up. Examples are the Net Investment Income Tax, Self-employment and payroll taxes, etc.
•Major changes to Obamacare. I doubt if there will be a complete repeal. There will have to be a transition period for current enrollees, etc.
•Corporate and business tax rates to be dramatically decreased. Will it be 15%, 20%, 25%? We just know it is going down to compete on the world stage.
•Increase of Section 179 to $1 million or possibly complete write off of all assets other than land in the year of purchase.
These are some of the major items that may occur. However, it is likely that these rules may be similar to the Bush tax cuts in that they will sunset in 10 years. I do not think that President-elect Trump will have a enough votes to push these changes through permanently, but like the election, he can always surprise us.
We will keep you posted.