VonLehman sat down with AICPA President & CEO, Barry Melencon, at a CPAmerica conference in Park City, Utah, to get a forecast on upcoming tax legislation for end-of-year 2021.
While it is important to note that the following information is not yet official, Barry and his team at AICPA have been immersed in recent legislation and were pivotal in the design and implementation of the PPP program. Having put $800 billion in the hands of small businesses, the PPP will certainly go down as one of the most successful assistance programs in US history. The program, which was put together with the Treasury and considerable assistance from the AICPA, was implemented in just two weeks. The haste in which this program was developed is simply unprecedented.
Regarding the issue of deductibility of funds (generally all payroll) used to obtain the PPP loans, Treasury Secretary Mnuchin and the IRS went against the intent of the PPP when they ruled that expenditures were non-deductible, erasing the possibility of a double tax benefit (non-taxable income and deductible expenses to generate the non-taxable income). The AICPA convinced many members in Congress to legislate and overturn the attempt by Mnuchin and the IRS. As a result, the legislation provided the assistance we all desperately needed and expected. Now that we’ve discussed AICPA’s influence on the PPP program, here are a few notes highlighting the insight Barry shared at today’s conference:
- There will be new tax legislation by the end of October.
- The top individual rate will go to 39.6%.
- Corporate rates will be graduated starting at 18% and topping out at 25%.
- Capital Gains top rate will be 25%.
- International taxation is the plug in the budget and will go through the roof.
- The estate tax provisions set to expire in 2026 will be rolled back to 2022.
- The state tax deduction limit of $10,000 will likely increase, but only to $15,000.
- The “step-up in Basis” when someone dies is set to continue.
- The capital gains increase will be retroactive to Sept 13, 2021.
- All other provisions will be effective in 2022.
- There will be some reductions in the benefits of the Qualified Business Income deduction.
- There will be no more extensions of the tax filing due dates.
- There will not be a minimum tax based on book income.
- All S Corporation income being taxed as compensation will not be in this bill.
- Significant partnership changes are coming.
Your team at VonLehman will continue to stay on top of this developing legislation. Expect timely updates as we confirm new and credible information.
