Blog Posts Tagged With Accumulated Earnings Tax

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Reactions to the Trump Tax Plan

As noted in yesterday’s summary, the basic outline of the Trump Administration’s tax plan is largely similar to the Trump campaign proposals, with fewer details and with one notable shift toward the House Blueprint’s approach – the move toward territoriality. The table below shows how this latest plan compares to the House Blueprint and the Trump 2016 campaign plan.

In the press conference to announce the “broad-strokes” plan, both Treasury Secretary Mnuchin and National Economic Council Director Cohn said that they were in agreement with members of Congress over the four driving goals of tax reform – grow the economy and create millions of jobs, simplify the tax code, provide tax relief to American families, especially middle-income families and lower the business tax rate from one of the highest in the world to one of the lowest. Continue Reading

Accumulated Earnings Tax Guidance: Is IRS Anticipating Lower Corporate Rates?

The IRS recently issued guidance applying the accumulated earnings tax, a rarely imposed penalty that could take on increased importance if the tax rates proposed by the Republican “Blueprint” for tax reform are enacted.

The accumulated earnings tax is a 20% surcharge on the taxable income of a corporation formed or availed of for the purpose of avoiding shareholder taxes by permitting corporate earnings to accumulate rather than being distributed. As discussed below, the significance of the accumulated earnings tax was diminished in the 1980s when individual tax rates were lowered so as to align more closely with corporate rates, reducing the incentive to defer taxation at individual rates. Continue Reading

Setting the Stage for Comprehensive Tax Reform

Tax reform will be one of the top priorities for the 115th Congress. Hopes for pursuing tax reform to a successful conclusion are high, given one-party control of the government (and exuberant campaign promises). Following the 2016 election, Davis Polk laid out the background and context in which tax reform measures will be considered, with links to summaries of the leading proposals and details on the politics of tax reform. Although life in Washington has moved forward since this memo was published, the key points and players remain the same. Read on for things to watch.

Setting the Stage for Comprehensive Tax Reform, December 2, 2016

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