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Law Offices of Donald A. Barnes, PLLC
818 Connecticut Avenue, N.W., Suite 1200
Washington, DC 20006
Telephone: (202) 728-4407
Cell: (202) 360-0275
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Washington Tax Alert November 20, 2017

Washington Tax Alert from Don Barnes, dbarnes@washingtontaxlaw.com
November 20, 2017

Tax legislation remains under consideration in Congress, and there are many proposed changes to the taxation of individuals. The following changes are likely to be made to the taxation of businesses.

  • The LIFO inventory method will be retained without changes, contrary to prior proposals by the Obama Administration to eliminate the method.
  • Full expensing will be allowed for equipment and other personal property with a recovery period of 20 years or less, including computer software and used property, but not for real property.
  • Equipment and other personal property will no longer be eligible for like kind exchange treatment.
  • If full expensing is allowed for most property including used property, acquirers of businesses will have an incentive to structure acquisitions as taxable asset acquisitions, including stock acquisitions with an IRC § 338(h)(10) election, as opposed to stock acquisitions or corporate reorganizations.
  • Corporations and partnerships which have a C corporation as a partner, if they have average annual gross receipts of $25 million or less, will be eligible to use the cash method of accounting, treat inventory as non-incidental materials and supplies, and avoid the long-term contract method of accounting for construction contracts estimated to be completed within two years.
  • All taxpayers, except small businesses, will be subject to increased limitations on the deductibility of interest expense.

Law Offices of Donald A. Barnes, PLLC
818 Connecticut Avenue, N.W.
Suite 1200
Washington, DC 20006
Telephone: (202) 728-4407
Cell: (202) 360-0275
E-mail: dbarnes@washingtontaxlaw.com
Website: www.washingtontaxlaw.com