The GOP Tax Reform/Cuts Plan

Taxation Without Representation.

https://www.politico.com/story/2017/12/20/puerto-rico-governor-tax-bill-midterms-245870

Is anybody else watching the Trump/Senate love-fest? Shoot me now.

Paul Ryan: "Could not have been done without exquisite presidential leadership."

kthnry said:

Paul Ryan: "Could not have been done without exquisite presidential leadership."

Trump seems to require this type of verbal fellatio from a person in federal govt who wants to keep their job.

Orrin Hatch: Revolting level of pandering. 

Why does Dean Heller look so happy?

Turned off the tv - for reelz.

The line between satire and reality has officially been obliterated:

GOP Leaders Celebrate Decisive Win Over Americans

here's a good piece covering the way to game the new provisions in the tax code, if you've got a million or two:

https://www.vox.com/the-big-idea/2017/12/20/16802134/republican-tax-plan-tricks-loopholes-inefficiency-accountants

I briefly heard a discussion on radio of a consensus that Congress will have to make at least three "fixes" to the Tax Law between January 1st and July 1st. Once the Law kicks in they will be confronted by the hidden problems.

I am wondering if it would be worth it to create pass-through LLCs for my rental condo and my two-family house. Better call my accountant.

kthnry said:

I am wondering if it would be worth it to create pass-through LLCs for my rental condo and my two-family house. Better call my accountant.

By "rental condo" do you mean you pay rent or that you rent it to a tenant who pays you? If the latter I think you should definitely form an LLC.

LOST said:

Taxation Without Representation.

https://www.politico.com/story/2017/12/20/puerto-rico-governor-tax-bill-midterms-245870

So? That's normal. Talk to the NJ residents working in NY who have to pay NY tax even though they have no representation in NY.

LOST said:

kthnry said:

I am wondering if it would be worth it to create pass-through LLCs for my rental condo and my two-family house. Better call my accountant.

By "rental condo" do you mean you pay rent or that you rent it to a tenant who pays you? If the latter I think you should definitely form an LLC.

I own the condo and rent it to a tenant. The rent is about $100/month more than the unit costs me, so the profits aren't huge. I wonder if the additional tax preparation costs would outweigh the pass-through savings. 

Should I have the LLC in place on 1/1? Or can I set it up at my leisure next year?

You mean for lower taxes? Maybe in some parts of NJ but taxes in MAPSO are definitely higher than similar towns on LI that I'm familiar with. And NJ has fewer things included. There's also STAR rebates in NY

LOST said:

conandrob240 said:

My parents and sister live on LI and we've looked at many homes there, taxes are considerably lower for comparable towns with arguably better schools and services. 

I know many people who grew up on LI who have "escaped" to New Jersey.

Haven't read all the tax bill details yet but why is an LLC better now?

kthnry said:

LOST said:

kthnry said:

I am wondering if it would be worth it to create pass-through LLCs for my rental condo and my two-family house. Better call my accountant.

By "rental condo" do you mean you pay rent or that you rent it to a tenant who pays you? If the latter I think you should definitely form an LLC.

I own the condo and rent it to a tenant. The rent is about $100/month more than the unit costs me, so the profits aren't huge. I wonder if the additional tax preparation costs would outweigh the pass-through savings. 

Should I have the LLC in place on 1/1? Or can I set it up at my leisure next year?

You do not have to do it before January 1st, but talk to your accountant. If you decide to do it you will not only have to form the LLC but you then have to transfer title to the LLC. I am not sure that it will make a difference tax-wise whether you own the property as an LLC or in your own name but an LLC is advantageous from a liability point of view.

Anyway don't rely on anyone's online advice, including mine. Consult professionals I person.

conandrob240 said:

Haven't read all the tax bill details yet but why is an LLC better now?

Income from a pass-through LLC is now taxed at a much lower rate, which is beneficial to real estate investors. The last-minute reduction in this particular tax is the reason Bob Corker is suddenly being so defensive. It will greatly benefit him, Trump, and a number of other senators with large real estate holdings. I'm nowhere near that tax bracket, but I'm going to see if I can jump on that gravy train.

https://www.washingtonpost.com/politics/trump-stands-to-save-millions-under-new-tax-measure-experts-say/

A major provision in the bill, added last week, offers a 20 percent tax deduction for the owners of pass-through businesses, which do not pay corporate taxes but pass through income to their owners’ individual income taxes. ...

An earlier version of the tax plan had given bigger pass-through deductions to businesses with bigger workforces or higher payrolls. But the new version allows companies like Trump’s — which own valuable property but pay few to no employees — to also reap the benefits. Tax experts said real estate, rental and leasing businesses will benefit more than any other industry.

The hallmark of this bill seems to be that it penalizes people who earn money by working for it, to subsidize people who get their money through more passive means such as corporate profit taking or inheritance.  Even if you are super wealthy like a Wall Street business executive, you are going to be taxed at a higher rate than someone who is making a living with pass throughs from an LLC.  The GOP is showing breathtaking disdain for people who work for someone else, even if those employees are wealthy.

Then there are all the other stealth increases on middle class and working class folks that are going to phase in over time.  There's the switch to using chained CPI to calculate tax brackets. Over time, a lot of people are going to see increases because of "bracket creep" that occurs directly because of the change in method of calculating inflation.

NYT had a pretty good summary of how the Republicans are sticking it to many categories of taxpayers in order to reward a chosen few:

You Cannot Be Too Cynical About Republican Tax Bill

I just hope Schumer and company are working on their own Repeal and Replace plan for the the 2018 elections.

ml1 said:

The hallmark of this bill seems to be that it penalizes people who earn money by working for it, to subsidize people who get their money through more passive means such as corporate profit taking or inheritance.  Even if you are super wealthy like a Wall Street business executive, you are going to be taxed at a higher rate than someone who is making a living with pass throughs from an LLC.  The GOP is showing breathtaking disdain for people who work for someone else, even if those employees are wealthy.

I've known some Wall St option commodity traders. The ones I know are independent and don't get W4 salary. Their income and expenses are passed through their corporations.

A significant renumeration for very high level corporate executives are stock options and other non-salary benefits (corporate car, corporate security chauffeur, platinum health plan, that corporate apartment in the city, etc.) Some benefits are supposedly to be listed as some type of other income on their personal taxes.

drummerboy said:

I just hope Schumer and company are working on their own Repeal and Replace plan for the the 2018 elections.

And Trump will not veto? Good luck on that.

ok, I talked to my accountant and he seemed to think that I will save money on taxes despite the $10K limit on state taxes due to the increase in the personal exemption, decrease in the fed rate and the child credit.

I own the condo and rent it to a tenant. The rent is about $100/month more than the unit costs me, so the profits aren't huge. I wonder if the additional tax preparation costs would outweigh the pass-through savings. 

Should I have the LLC in place on 1/1? Or can I set it up at my leisure next year?

When it comes specifically to real estate, there is also a type of business that you can set up that is great for taxes but I don't recall what it is. It is worth researching for sure.

I'm just talking about using it as the main campaign message. The Repubs ran on Obamacare repeal for years when there was no chance they could be successful at it.

BG9 said:

drummerboy said:

I just hope Schumer and company are working on their own Repeal and Replace plan for the the 2018 elections.

And Trump will not veto? Good luck on that.

While many NY, NJ and California residents suffer the most from the Tax Bill, most residents in other states will likely fare somewhat better (to varying degrees) under the Tax Bill.  I doubt the Republicans are looking to capture any Senate seats or new House seats in these 3 states, so I am not sure how much this will ultimately affect the mid-terms.  I seriously doubt that residents in the other 47 states are outraged about the effects on NY, NJ and California residents. 

Grambling said:

While many NY, NJ and California residents suffer the most from the Tax Bill, most residents in other states will likely fare somewhat better (to varying degrees) under the Tax Bill.  I doubt the Republicans are looking to capture any Senate seats or new House seats in these 3 states, so I am not sure how much this will ultimately affect the mid-terms.  I seriously doubt that residents in the other 47 states are outraged about the effects on NY, NJ and California residents. 

 

A serious blow to the economies of those three States will eventually have a negative effect on the whole country. California is the largest State in terms of Population. NY ranks among the highest. If residents of those States have less money to spend it will reverberate throughout the economy.

LOST said:


A serious blow to the economies of those three States will eventually have a negative effect on the whole country. California is the largest State in terms of Population. NY ranks among the highest. If residents of those States have less money to spend it will reverberate throughout the economy.

It's now time to ask whether among their many other faults, if Republican members of Congress aren't also relentlessly stupid. 

LOST said:

Grambling said:

While many NY, NJ and California residents suffer the most from the Tax Bill, most residents in other states will likely fare somewhat better (to varying degrees) under the Tax Bill.  I doubt the Republicans are looking to capture any Senate seats or new House seats in these 3 states, so I am not sure how much this will ultimately affect the mid-terms.  I seriously doubt that residents in the other 47 states are outraged about the effects on NY, NJ and California residents. 

 

A serious blow to the economies of those three States will eventually have a negative effect on the whole country. California is the largest State in terms of Population. NY ranks among the highest. If residents of those States have less money to spend it will reverberate throughout the economy.

This logic will not matter one bit during an election.  People make their choices based on sound bites, immediate financial situations, or spin, if they look past the abortion position.  Republicans and Democrats alike.

I run a small business and starting in 2018 have a rental income property. I am guessing it’s time for an LLC