CPAs tackling complexities of the upcoming tax season

By Jessica Salerno, OSCPA senior content manager

The 2017 Tax Cuts and Jobs Act implementation means practitioners everywhere are gearing up for an intense tax season.

We asked CPA members of OSCPA’s Federal Tax Committee about the more pressing issues this busy season, and they started with the deduction for qualified business income, the 199A deduction.

“Right now, I think that we're dealing with lots of uncertainty,” said Bob Horstman, CPA, senior tax manager with RSM. “Even just the very simple definition of what is a trade or business is not defined in the new law.”

“There's a whole bunch of limitations around what a specified service trade or business is,” said Rob Roll, CPA, Tax Senior at GBQ Partners. “But also, the limitations don’t apply if a married taxpayer has taxable income that is below $315,000.”

Roll said some of these issues have already started to arise with clients.

Christopher Axene, CPA, shareholder at Rea & Associates, said professionals will be able to learn and adapt as time goes on and as the IRS issues additional guidance and starts to audit these deductions.

The group also tackled Sec. 168(k) and the increase of the allowable first-year depreciation deduction for qualified property from 50% to 100%.

“Probably the biggest, perhaps most vanilla change is the introduction of a 100% deduction,” Roll said.

They also compared the benefits of the Sec. 179 tax deduction.

“Where it makes good business sense, how many assets can you buy?” Axene said. “You know to manage your taxable income. You have to be careful though in deciding which accelerated depreciation method, bonus vs Sec. 179, to take as that can impact the mid-quarter test under the tax depreciation rules if you didn't use bonus on other assets acquired early in the year.” Sec. 179 does not count against you for purposes of the mid-quarter test while bonus depreciation does.