On December 22, 2017, President Trump signed H.R. 1, the “Tax Cuts and Jobs Act” into law which now changes the taxation landscape for individuals and businesses. Individual taxpayers will be affected by changes such as decreases in income tax rates, larger standard deduction, an increase in the child tax credit, and itemized deductions changes. Businesses will see a new C-corporation tax rate and new farming depreciation rules. A new deduction, IRC section 199A, provides means for flow-through business entities (sole proprietors, partnerships, LLCs and Sub-S corporations) to deduct a portion of profits to “level” the playing field with C-corporations that now have a flat 21% income tax rate. Cooperatives may also flow the IRC section 199A deduction to their patrons.
Congress will address needed technical changes to the new law with clarifying legislation. Similarly the Treasury Department must issue rules and regulations pertinent to the new tax law, which are forthcoming.
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