As everyone knows who has tried to understand the big Tax Reform law, the Tax Cuts & Jobs Act (TCJA) that was rushed through near the end of December, it is a bit of a mess, to put it mildly. As is too typical for our rulers of both establishment parties, they were extremely reckless in their writing of the actual legislation. Last minute modifications in the margins in pen, pencil, and crayon just heightened the absurdity of this process, which has long been compared to the production of sausages.
Conan O’Brien did some parodies of these handwritten tax law details.
Even the typed portions of the law were not properly proofread before the law was passed and signed by Trump. New mistakes and ambiguities as to the intentions of our rulers are popping up on almost a daily basis. Supposedly the GOP rulers are trying to pass a technical corrections bill to fix their drafting mistakes, and the Dims are taking their standard obstructionist approach of simply opposing anything the GOP wants; so it’s anyone’s guess whether the mistakes will ever be corrected.
In the meantime, we in the real world outside of the fantasyland of DC have to do out best to try and comply with the various confusing aspects of the new law. All of this confusion could be considered as bad or as an opportunity to game the system even more.
Some of the big areas of confusion that will affect a lot of business owners include:
Whether or not the deduction for all business meals has been killed, or just certain kinds of meals and entertainment. There are tax experts taking both sides on this.
The new deduction for up to 20% of Qualified Business Income (QBI) has been receiving a lot of press and is probably the messiest and hardest to understand part of this entire tax bill. The attendance at webinars I have been taking on this topic has been huge, compared to presentations on other facets of the new law, illustrating how widespread the confusion is among tax practitioners. Many tax pros are predicting that ironing out the actual real world application of this portion of the tax law may take several years, as cases make their way to the Tax Court. Of course, by that time, there could be an entirely new “Tax Reform” law in place, depending on who is in power in DC.
So as of right now, we are all in a learning and adjusting phase. Rather than try to dig through the entire TCJA in one sitting, some tax publishers have broken it down into more reasonable bite-size pieces. My favorite tax reference source, TheTaxBook, has taken this approach and has published eight different informational brochures on some of the topics in the TCJA, which I have uploaded to one of my online document storage locations for your downloading and viewing pleasure.
New Tax Law – This is the first brochure they produced, giving a quick summary of the entire bill.
Excess Business Loss & Net Operating Loss
New Business Income Deduction – Covering the new QBI deduction
Tax Guru - Ker$tetter Letter 