This presentation will be two hours in duration and will offer two CPE credits. The presentation will focus on tax law updates for both businesses and individuals that are expected to be passed. The discussion during the webinar will feature information on both sides, as they are often interdependent. The webinar will also touch on the tax policies of some of the 2016 presidential candidates and how these policies will impact you and your organization.

1. Questions?
Mark Heath
• Partner
• CPA
• MHeath@macpas.com
Ryan Rutt
• Senior Tax Manager
• CPA
• RRutt@macpas.com

4. Tax Update:
2016 & Beyond
Mark Heath, Partner
Ryan Rutt, Senior Tax Manager

5. Introductions
Mark Heath
• Partner
• CPA
• MHeath@macpas.com
Ryan Rutt
• Senior Tax Manager
• CPA
• RRutt@macpas.com

6. Federal Tax Update
• Recent legislation
•Candidates’ tax plans
• Tax “expenditures” – what should tax
policy look like?

7. PATH Act of 2015
Permanently Extended Business Provisions
– Section 179 expensing - $500,000 ($2M investment limitation)
– 15 year recovery for leasehold/retail improvements and restaurant property
– 5-year recognition period for S-corp built-in gains
– S-corps charitable contributions of property
– Research tax credit

8. PATH Act of 2015
Permanently Extended Individual Tax Provisions
– IRA distributions to charity
– 100% exclusion of gain on small business stock
– State and local sales tax deduction
– Teachers’ classroom expense deduction
– Enhanced child tax credit
– Enhanced American Opportunity Tax Credit

9. PATH Act of 2015
Non-Permanent Extenders
– Bonus Depreciation
– 50% through 2017
– 40% for 2018
– 30% for 2019
– Extended through 2016
– Exclusion of COD income on principal residence
– Deduction for mortgage insurance premiums
– Deduction for qualified tuition expenses
– Alternative fuel credit
– Extended through 2019
– Work opportunity tax credit

10. Other Federal Tax Legislation
• Surface Transportation and Veterans Health Care Choice
Improvement Act of 2015
• Revised tax return due dates
• Effective date
• Revised extended due dates

11. Other Federal Tax Legislation
• Omnibus Appropriations Act
• Delay the “Cadillac Tax” for two years – from 2018 to 2020
• Make the “Cadillac Tax” Deductible Against Income Tax
• Suspend Health Insurance Tax for One Year
• Other IRS Rulings and Announcements

12. Candidates’ Tax Plans
• Hillary Clinton*
• 4% surtax on income over $5 million
• Minimum 30% rate on individuals earning over $1 million
• Cap on benefit from itemized deductions
• Strengthen rules against “inversions” by imposing an “exit tax” on unrepatriated earnings
• Institute a “medium-term” capital gain category
• Increase estate tax rate to 45% and lower exclusion to $3.5 million
• Establish business tax credit for profit-sharing and apprenticeships
• Establish tax on high-frequency financial transactions
• Tax carried interest as ordinary income
*TaxFoundation.org

13. Candidates’ Tax Plans
• Donald Trump*
• Establishes four tax brackets, with rates of 0%, 10%, 20% and 25%. The top rate applies to income over $150,000 for single
filers and $300,000 for joint filers.
• Phases out all deductions except for the charitable deduction and the mortgage interest deduction.
• Eliminates the alternative minimum tax.
• Eliminates the net investment income surtax.
• Lowers the top corporate rate to 15%.
• Ends the deferral of overseas corporate income but preserves the foreign tax credit. Enacts a deemed repatriation of foreign
income at a 10% rate.
• Taxes pass-through business income at 15%.
• Eliminates the estate tax.
• Places a "reasonable cap" on the deductibility of interest against the corporate income tax.
• Taxes carried interest at ordinary income rates.
*TaxFoundation.org

14. Candidates’ Tax Plans
• Bernie Sanders*
• Establishes four new brackets of 37%, 43%, 48%, and 52%. The top rate applies to taxable income over $10 million. Raises
the rate of all other brackets by 2.2%.
• Caps the tax benefit of itemized deductions at 28% of the deduction. Eliminates the Pease limitation on itemized deductions.
• Eliminates the alternative minimum tax.
• Taxes capital gains and dividends at ordinary income rates for households with incomes over $250,000.
• Ends the deferral of tax on foreign income. Creates several limits on the foreign tax credit. Revises rules about corporate
inversions and foreign corporations operating domestically.
• Raises the employer-side payroll tax rate by 6.2%. Applies the Social Security payroll tax to earnings over $250,000. Creates a
new payroll tax of 0.2%, to fund paid family leave.
• Increases the top estate tax rate to 65%, and lowers the estate tax exclusion to $3.5 million.
• Establishes a financial transactions tax, at a rate between 0.005% and 0.5%, with an offsetting credit for low-income
Americans.
• Taxes carried interest at ordinary income rates.
*TaxFoundation.org

15. Candidates’ Tax Plans
• Ted Cruz*
• Establishes a flat rate of 10% on all ordinary income. Increases the standard deduction to $10,000 per filer.
• Eliminates all itemized deductions except for the charitable deduction and the mortgage interest deduction.
• Eliminates all credits except for the earned income tax credit and the child tax credit. Expands the earned income tax
credit by 20%.
• Eliminates the Alternative Minimum Tax.
• Lowers the rate on capital gains and dividends income to 10%.
• Replaces the corporate income tax with a 16% business transfer tax, which applies to all capital income and labor
payments.
• Shifts to a territorial tax system and enacts a deemed repatriation of foreign income at a 10% rate.
• Taxes pass-through business income at 10%.
• Eliminates the payroll tax.
• Eliminates the estate tax.
• Creates tax-free savings accounts for up to $25,000 of savings a year.
*TaxFoundation.org

16. Cruz’ “VAT” Tax
Sales Tax Cruz Tax
Farmer Sells Wheat $0.50 $0.50
Tax Rate 0% 16%
Tax $0.00 $0.08
Baker Bakes Bread $1.50 $1.50
Less: Cost of wheat ($0.50)
Value Created $1.00
Tax Rate 0% 16%
Tax $0.00 $0.16
Consumer Buys Bread $2.00 $2.00
Less: Cost of bread ($1.50)
Value Created $0.50
Tax Rate 6% 16%
Tax $0.12 $0.08
Total Price to Consumer $2.12 $2.00
Total Tax Paid $0.12 $0.32
Price Without Taxes $2.00 $1.68
True Tax Rate 6% 19%

17. Candidates’ Tax Plans
• Marco Rubio*
• Establishes three brackets of 15%, 25%, and 35%. The top rate applies to taxable income over $150,000 for single filers and $300,000
for joint filers.
• Eliminates all itemized deductions except for the charitable deduction and the mortgage interest deduction. Caps the mortgage
interest deduction at $300,000 of acquisition debt.
• Establishes an additional child credit of $2,500, used to offset income and payroll taxes. Replaces the standard deduction, personal
exemption, and 10% bracket with a refundable personal credit.
• Eliminates the alternative minimum tax.
• Lowers the rate on capital gains and dividends income to 0%.
• Lowers the top corporate rate to 25%.
• Moves to full expensing of investment costs.
• Shifts to a territorial tax system and enacts a deemed repatriation of foreign income at a 6% rate.
• Taxes pass-through business income at 25%.
• Eliminates the additional Medicare tax on compensation over $200,000.
• Eliminates the estate tax.
• Eliminates the head of household filing status. Removes interest income from the tax base, except for interest received by financial
institutions. Provides a new tax credit for businesses that offer paid family leave.
*TaxFoundation.org

18. Candidates’ Tax Plans
• Ben Carson*
• Establishes a flat rate of 14.9% on all ordinary income. Alters the standard deduction and personal exemption to
exempt wage income under 150% of the federal poverty level of a filer.
• Eliminates all itemized deductions.
• Eliminates all credits except for the foreign tax credit.
• Eliminates the Alternative Minimum Tax.
• Lowers the rate on capital gains and dividends income to 0%.
• Lowers the top corporate rate to 14.9%.
• Moves to full expensing of investment costs.
• Shifts to a territorial tax system. Allows corporations to repatriate international income tax-free for six months,
provided they use 10% of the money in enterprise zones or to create jobs for the unemployed.
• Taxes pass-through business income at 14.9%.
• Eliminates the taxation of Social Security benefits and the deduction for the employer-side payroll tax.
• Eliminates the estate tax.
• Eliminates the exclusion of fringe benefits. Eliminates the deductibility of interest and exempts interest from taxation
for non-financial institutions.
*TaxFoundation.org

19. Candidates’ Tax Plans
• Jeb Bush*
• Establishes three tax brackets, with rates of 10%, 25%, and 28%. The top rate applies to taxable income over $85,750
for single filers and $141,200 for joint filers. Increases the standard deduction to $11,300 for single filers and $22,600
for joint filers.
• Eliminates the state and local income tax deduction. Caps all remaining deductions, besides the charitable deduction,
at 2 percent of adjusted gross income. Eliminates the Pease limitation on itemized deductions.
• Doubles the Earned Income Tax Credit for childless filers, and expands it for filers between 21 and 24.
• Eliminates the alternative minimum tax.
• Eliminates the net investment income surtax. Taxes interest income at capital gains and dividend tax rates.
• Lowers the top corporate rate to 20%.
• Moves to full expensing of investment costs.
• Shifts to a territorial tax system and enacts a deemed repatriation of foreign income at an 8.75% rate.
• Exempts workers over 67 years old from payroll taxes.
• Eliminates the estate tax and ends step-up basis in capital gains for estates.
• Eliminates the deductibility of interest. Eliminates the personal exemption phase-out. Allows second earners to file
their tax returns separately. Taxes carried interest at ordinary income rates.
*TaxFoundation.org

20. Candidates’ Tax Plans
• Rand Paul*
• Establishes a flat rate of 14.5% on all ordinary income. Increases the standard deduction to $15,000 per filer.
Increases the personal exemption to $5,000 per person.
• Eliminates all itemized deductions except for the charitable deduction and the mortgage interest deduction.
• Eliminates all credits except for the earned income tax credit and the child tax credit.
• Eliminates the alternative minimum tax.
• Lowers the rate on capital gains and dividends income to 14.5%.
• Replaces the corporate tax with a 14.5% business transfer tax, which applies to all capital income and labor
payments.
• Moves to full expensing of investment costs.
• Shifts to a territorial tax system.
• Taxes pass-through business income at 14.5%.
• Eliminates the payroll tax.
• Eliminates the estate tax.
*TaxFoundation.org

21. Tax Expenditures
• What is a tax “expenditure”?
• Corporate vs Individual
•Effect on tax base vs preference
• What makes good tax policy?

22. Questions?
Mark Heath
• Partner
• CPA
• MHeath@macpas.com
Ryan Rutt
• Senior Tax Manager
• CPA
• RRutt@macpas.com

25. Questions?
Mark Heath
• Partner
• CPA
• MHeath@macpas.com
Ryan Rutt
• Senior Tax Manager
• CPA
• RRutt@macpas.com