Tax Reform Update: Slides and Videos to Help Tax Professionals Advise Clients

By Fred Sroka, Dean of the GGU School of Accounting & Bruce F. Braden School of Taxation

On November 16, the House of Representatives and Senate Finance Committee passed different versions of the Tax Cuts and Jobs Act. The proposals are sweeping in scope. Sadly, we won’t know which proposals (if any) become law until very late this year, or even early 2018. We have provided summary slides and videos to help tax professionals advise clients in this uncertain time. Our experts have tried to keep things short, high level, and focused on reasonable actions you might consider before December 31, 2017.

INDIVIDUAL TAX PLANNING

Individual taxpayers may benefit from the proposed reduced tax on flow-through business income. Small businesses may want to defer income and accelerate deductions in anticipation of potential 25% tax rates on 2018 business income. The Bills also encourage purchases of business property through expanded write-offs. Small businesses may choose to defer any major purchases that would be capitalized under current rules, in hopes of getting an immediate write-off in 2018.

The tax benefits of home ownership may be reduced dramatically. Homeowners may want to prepay property taxes, and perhaps prepay the January mortgage installment to assure deduction of the interest expense. Proposed limitations on property taxes and mortgage interest may adversely impact residential prices, particularly in high real estate markets such as Northern California.

Individual taxpayers may also want to prepay itemized deductions that will be repealed under the Bills. State income tax and many other itemized deductions are scheduled for limitation or repeal. Curiously, the proposed elimination of the alternative minimum tax might encourage taxpayers to defer charitable giving, in hopes to getting a higher 2018 tax benefit.

VIEW SLIDES FOR INDIVIDUALS >>
WATCH THE VIDEO >>

BUSINESS TAX PLANNING

The House Bill drops 2018 corporate tax rates from 35% to 20%. The Senate delays this reduction to 2019. Dramatic changes are also proposed to encourage investment in depreciable property, to discourage excessive debt, and to eliminate a variety of deductions, fringe benefits, and credits. Businesses should consider deferring income, accelerating deductions, and deferring purchases of depreciable property if current rules would require capitalization.

Domestic flow-through businesses (partnerships, LLCs, and S corporations) may want to consider converting to C corporation status to take advantage of the dramatic reduction in tax rates. These entities will have until March 15, 2018 to make a retroactive “check the box” election or revocation of an S election.

For financial accounting, ASC 740 requires the tax provision to reflect all changes in laws enacted by December 31. The potential impact on deferred tax assets and liabilities (and in particular on international operations) may have a dramatic impact on 2017 financials.

VIEW SLIDES ABOUT BUSINESS TAX >>
WATCH THE VIDEO >>

FLOW-THROUGH TAX PLANNING

Partnerships and S corporations must address the potential 25% tax rate on business income. This may impact compensation structures and future activities of owner-employees. S corporations need to consider a number of other special rules at year end, and partnerships should address the impending change to IRS audits under the Bipartisan Budget Act. Starting with 2018 tax returns, IRS can audit a partnership much like a corporation, and can simply collect any deficiency from the partnership itself unless substantial planning is undertaken.

VIEW SLIDES ABOUT FLOW-THROUGH ENTITIES >>
WATCH THE VIDEO >>

INTERNATIONAL TAX

The tax proposals will have their greatest impact on international tax. The reduction of U.S. corporate rates to 20% will be accompanied by a territorial tax system, under which the earnings of foreign subsidiaries can be distributed to the U.S. parent without any incremental U.S. tax. Other provisions seek to punish offshore income and encourage the repatriation of intellectual property.
Multinationals may decide to convert foreign branches into subsidiaries. If this election is made by March 15, 2018, it can be retroactive to January 1. Foreign subsidiaries may wish to engage in substantive tax planning to defer net income. U.S. parents may need to report the dramatic impact of the changes in the tax provision of their 2017 financial statements. Ultimately, the proposed changes may cause a profound change in how multinational corporations are structured, financed and operated.

VIEW SLIDES ABOUT INTERNATIONAL TAX >>
WATCH THE VIDEO >>


 

Videoconference: Join the Discussion on the New U.S. Tax Proposals

By Fred Sroka, Dean of the GGU School of Accounting & Bruce F. Braden School of Taxation

The proposed Tax Cuts and Jobs Act of 2017 has grabbed national attention.  We’ve prepared three PowerPoint slide decks to help you discuss the major proposals with your clients.

Download PowerPoint Presentations

Free Videoconferences for Tax Professionals

Next Tuesday, we are hosting one-hour videoconferences to share perspectives on the impact of the proposed changes. If you would like to join any of the discussions, please register using the links below:

Individual Taxpayer
November 14, 2017
11:00am – 12:00pm
Register now >>

Business Taxpayer
November 14, 2017
12:00pm – 1:00pm
Register now >>

International Taxpayer   
November 14, 2017
1:00pm – 2:00pm
Register now >>

If you can’t join but have suggestions or concerns, please let me know.


 

Accountant Stereotypes are Just Plain Wrong—Or, What a Career in Accounting is Really Like

By Fred Sroka, Dean of the GGU School of Accounting & Bruce F. Braden School of Taxation

When most people hear the word accountant, they think of the guy in the corner adding up numbers and not talking to anyone. Perhaps the way accountants are portrayed in movies is part of it. Consider the neurotic nerd Gene Wilder in the Producers (1968) or the completely unsocial Ben Affleck in the Accountant (2016). Like most stereotypes, they are just plain wrong. Let’s help bust some myths.

Myth #1: Accountants are antisocial.

Because accounting is a service business, we need to stay close to the needs and ultimate goals of our clients or employers. This kind of interpersonal connection is vital to doing a good job and part of the satisfaction. Anyone who’s worked in a public accounting firm knows that it’s a team sport. There are simply too many rules for anyone to do it all themselves.

The nerdy stereotype of a Certified Public Accountant (CPA) is simply not the image desired and held by the accounting profession. The typical stereotype depicts accountants as cold, aloof, and impersonal. In contrast, CPAs consider themselves skilled in the interpersonal abilities necessary to maintain successful client relationships. Large public accounting firms are increasing their investments in “emotional intelligence” training to better connect their people with one another and with their clients. If you want to hide behind a computer screen all day, your value to your clients won’t be much higher than QuickBooks™ or TurboTax™ .

Myth #2: Accountants are “math people” and “bean counters.”

Whereas the field was largely computational in the past, changes in technology have made this just one component in what happens. Nowadays, computers do most of the computational work, while accountants synthesize massive amounts of data into a simple picture of a company’s financial position. If a picture is worth a thousand words, a chart is worth a thousand numbers.

CPAs consider themselves skilled in the interpersonal abilities necessary to maintain successful client relationships. Large public accounting firms are increasing their investments in “emotional intelligence” training to better connect their people with one another and with their clients.

Myth #3: Accountants are not creative.

Many of our successful accounting alumni have a background in liberal arts. We have many music majors that have thrived in the GGU Master of Accountancy program, because musical literacy rests on an understanding of patterns and structures, along with a strong creative streak!

In the related field of Taxation, laws are always changing and are subject to interpretation. Our graduates describe how they enjoy collaborating with executives to analyze situations and decide what moves to make.

Myth #4: Accounting is not fun.

Accountants love solving puzzles. They live for those exciting “AHA moments” when you figure out a pattern or insight behind the numbers, much like finishing a New York Times Sunday crossword or even “finding Waldo.” That’s an accountant’s moment to celebrate.

At GGU, we create problem solvers who are proud to call themselves accountants. Our alumni are active at the best tech companies, accounting firms, governments, and non-profits, smashing stereotypes along the way.

Myth#5: Accountants do not serve the public good.

Many of our graduates are in the forensic accounting field and can use these gaming skills to nail the bad guys who cook the books or embezzle funds. Accountants also believe in giving back to the communities they serve. For example, CPA firms challenge their staff to work with Habitat for Humanity, Food Banks, and schools with financial literacy programs.

Myth #6: Accountants are all the same type of person.

Not all of us look like Gene Wilder or Ben Affleck. GGU’s diverse student body shows that accounting attracts people from all walks of life, ethnicities, and countries of origin. We have extroverts as well as introverts, those just out of college and those with many years of experience starting a new career or adding to their skills.

Myth #7: Accounting isn’t relevant to business goals.

Think of an accountant like a FitBit® for management and investors. Accountants give a quick, easy-to-understand picture of the company’s current financial health, clear guidance on how to improve this health, and solid metrics as the company develops.

At GGU, we create problem solvers who are proud to call themselves accountants. Our alumni are active at the best tech companies, accounting firms, governments, and non-profits, smashing stereotypes along the way.


About Fred Sroka

Fred Sroka, JD is the Dean of the GGU School of Accounting & Bruce F. Braden School of Taxation. Fred Sroka received his JD from UCLA, practiced as a tax lawyer for 18 years, worked as a tax accountant for 18 years, and managed a couple of years as a management consultant! He has been a member of the GGU adjunct tax faculty since 1983, and a member of the tax advisory board. Fred retired from PricewaterhouseCoopers (PwC) in 2014 and has served as the Dean of the Bruce F. Braden School of Tax since October 2014.

He holds an active CPA license in California and Colorado and is an inactive member of the California State Bar. Fred and his wife Ronda have two kids (both off in grad school), who provide constant coaching on the world from a millennial student’s perspective. Fred loves to play tennis and golf and is constantly puttering around the house with his tools.


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