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GOP Leaders, Administration Unveil Tax Reform Plan, New IRS “Winnings” Rule

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The following is from the American Horse Council:

GOP Leaders, Administration Unveil Tax Reform Plan, New IRS “Winnings” Rule

Speaker Paul Ryan (R-WI) will officially unveil the GOP template today at 2:15 PM EST.  To view today’s event via livestream, please go to the following link:  speaker.gov/live

On September 27, 2017, GOP leaders released a “template” laying out key elements to characterize comprehensive tax reform legislation.  The nine-page document identifies significant tax breaks for individuals and corporations, and includes a special focus on tax relief for small business.   Below are highlights that will have the most significant impact on the equine sector, among other corporate and individual taxpayers:

Business Reform

  • Small Business :  The framework establishes a maximum tax rate of 25 percent on small businesses operating as “sole proprietorships, partnerships and S corporations.”  With an increasing number AHC members filing as sole proprietorships and partnerships, this can potentially provide significant tax relief. Under current law, small businesses (pass-through entities) can pay federal taxes at rates as high as 39.6 percent.
  • Corporate Tax Rate :  The plan proposes to lower the corporate rate to 20 percent, down from the current 35 percent corporate tax rate.
  • Expensing:  The GOP framework “allows businesses to immediately write off the cost of … depreciable assets” for five years or more.
  • Business Interest :  The plan imposes “partial limits” for deduction of business interest on C corporations.  The tax writing committees will review interest deductions for non-corporate taxpayers during the legislative process.
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