1. Susan Miano, CPA/AVC, CFF of Friedman LLP
The New Tax Laws and How They Affect Divorce Settlements re: Alimony, Child Support, and Other Issues
Presenters: Charles F. Vuotto, Jr. Esq. of Starr Gern, Davison & Rubin, P.C., and
Susan Miano, CPA/AVC, CFF of Friedman LLP

2. SPEAKERS Susan Miano, CPA, ABV, CFF Friedman LLP - Partner
Forensic Accounting, Litigation Support and Valuation Services Group
Susan has over 30 years of public and private accounting experience. Her clients include businesses and professional practices of all sizes as well as individuals, trusts, estates and partnerships. She provides business valuation, litigation support and forensic services in the areas of commercial and matrimonial litigation, economic damages, litigation support and business planning. She has served as an expert witness in valuation, economic damages, partnership/shareholder disputes and forensic accounting litigation.

3. SPEAKERS Charles F. Vuotto, Jr., Esq.
Starr, Gern, Davison & Rubin, P.C.
Mr. Vuotto is Of Counsel with Starr Gern, Davison & Rubin, P.C. in Roseland, New Jersey. He has dedicated his career of over 30 years to the practice of family law. He is certified by the New Jersey Supreme Court as a Matrimonial Law Attorney. He is a Past Chair of the Family Law Section of the New Jersey State Bar Association, the Editor-in-Chief of the New Jersey Family Lawyer and a Fellow of the American Academy of Matrimonial Lawyers (“AAML”). Mr. Vuotto is Certified by the AAML to arbitrate family law matters and is a R. 1:40 Family Law Mediator. Mr. Vuotto is the 2016 Saul Tischler Award Recipient, which is the most prestigious award conferred upon a family law attorney by the NJSBA Family Law Section. Further, he has an AV Rating by Martindale-Hubbell® Peer Review and has been named to Best Lawyers of America and New Jersey Super Lawyers lists in multiple years.

4. WHO IS FRIEDMAN LLP?
Leading provider of accounting, tax and business consulting needs of public and private companies since 1924
Friedman LLP’s clients have the advantage of working with a mid-size accounting firm that combines the staff and resources of a large firm with a philosophy of personal responsibility for our clients.
Friedman LLP is an independent member firm of DFK International, an association providing global resources.

5. Starr, Gern, Davison & Rubin, P. C
Starr, Gern, Davison & Rubin, P.C., provides comprehensive legal services to companies and individuals. We provide advice to businesses in financial and commercial transactions and represent their interests in all phases of arbitration, mediation and litigation. We also serve individuals in family law, personal injury and medical malpractice cases, labor and employment matters and in matters related to estate planning and estate litigation and tax consulting and litigation.
Starr Gern is a mid-sized law firm that has the accumulated knowledge, experience and resources to provide expert representation to all of our clients. Whether we are counseling multinational corporations, national retail and manufacturing businesses, closely-held corporations or individuals, we pride ourselves on providing our clients with individualized cost-effective solutions throughout our legal practice.
The attorneys at Starr Gern are consistently recognized as leaders in their areas of practice. Our attorneys are consistently selected as Super Lawyers in New Jersey. In addition, our associates have been named as Rising Stars by the same organization. Many of our partners have received an AV designation in Martindale-Hubbell's peer review ratings. We are proud that our lawyers are frequently named in news articles and professional journals and have assumed leadership roles in civic and legal organizations.

6. Agenda
Overview of the Tax Cuts and Jobs Act (TCJA) and its major elements
Understanding the impact and consequences of various tax reform changes on the practice of family law
Individual tax provisions
Business tax provisions
Key takeaways from the TCJA to consider implementing in your practice
Consideration for protective language in Marital Settlement Agreements (“MSA”)
Impact of sunset provisions – All provisions sunset in 2025 unless otherwise indicated.
New considerations regarding the interplay between equitable distribution and alimony
There is no longer a “typical case”
We still await guidance and clarification from the IRS.

7. Introduction
The Tax Cuts and Jobs Act is the most significant tax legislation to arrive in the last 30+ years.
Just as a HINT, here’s who’s happy:
C Corporations
Certain Pass Through Entities
Standard Deduction users
Parents with children in private/religious school
Businesses that rely on equipment to generate profits
Estates worth $10-$20 million
Business owners that use their vehicles for business
This presentation reflects information that was known as of March 1, 2018.

8. Introduction (cont.) Divorcing clients (to be discussed)
…and here’s who’s not so happy (notice the list is just a little longer):
Divorcing clients (to be discussed)
Residents of states with high taxes
Employees who deduct business expenses
Individual investors that pay advisory/management fees
Individuals who pay for tax advice/compliance
Victims of casualty losses
Individuals that move frequently for business purposes
Parents with many children
Charities
Employees whose employers contribute to retirement plans on their behalf
Business entertainers
Home equity debtors
Business debtors with high interest deductions
This presentation reflects information that was known as of March 1, 2018.

9. Individual Income
Tax Provisions

10. Individual Income Tax
New individual income tax rates and brackets effective for tax years beginning after 12/31/17
Continue to have seven tax brackets
Highest rate reduced from 39.6% to 37%
Married Filing Joint filers – top 37% bracket starts at $600,000 (from 39.6%)
Single filers – top 37% bracket starts at $500,000 (from 39.6%)

11. Individual Income Tax (cont.)
Increase in STANDARD DEDUCTION
$24,000 for Married Filing Joint filers (was $12,700)
$18,000 for Head of Household (was $9,350)
$12,000 for all other taxpayers (was $6,350)
PERSONAL EXEMPTIONS eliminated
Child dependency exemptions are eliminated.
May hurt certain taxpayers; a married middle class family with 4 kids will lose an exemption deduction of $24,300 ($4,050 * 6)
After the above two changes only, the net result is that a family of 4 (or more) is in a lessor position, the standard deduction went up by less than the loss of the exemptions. A family of 3 (or less) is in the same position. Stay tuned for discussion of tax credits and the revised tax tables….
KIDDIE TAX modified
Unearned income taxed at the trust rates rather than the parents’ marginal rates. The maximum 37% bracket for trusts begins at $12,500 of taxable income .

12. Individual Income Tax (cont.)
CAPITAL GAINS TAX remains generally unchanged
Alternative Minimum Tax remains for individuals, but will apply to fewer taxpayers for a number of reasons.
The $10,000 deductible cap on the state and local tax deduction is likely to prevent many taxpayers from continuing to be in AMT. The state and local tax add-back previously caused many taxpayers to be subject to AMT.
Further, the AMT exemption amounts have increased to $109,400 from $84,500 (married) and $70,300 from $54,300 (single).
The phase-out of the exemption amount begins at $1,000,000 (married) and $500,000 (single) compared to $164,100 (married) and $123,100 (single) under the prior code
The above suggests that less people may be subject to AMT in the foreseeable future.

13. Individual Income Tax (cont.)
Changes to the MORTGAGE INTEREST DEDUCTION
Limited to 2018 acquisition indebtedness of $750,000 (from $1 million)
Generally no deduction for home equity indebtedness (pre- or post- TCJA) except
Interest on a home equity debt used to improve an existing home or to buy a second home is deductible. The loan must be secured by a qualified residence.
Interest on the same home equity debt used to pay personal living expenses, such as credit card debts, is not deductible..

14. Individual Income Tax (cont.)
Changes to the MORTGAGE INTEREST DEDUCTION (cont.)
Grandfather clause to preserve deduction for pre-existing mortgage loans (not Home Equity loans)
“Tracing Clause” to preserve deduction for mortgage loans that are refinanced
If an existing mortgage is refinanced, the taxpayer may deduct interest on the portion of the new loan that does not exceed the outstanding balance of the old loan; interest on the excess is not deductible
Mortgages existing prior to 12/31/17 (or approved by that date and closed prior to 4/1/18) – Interest on up to $1M still deductible
It is unclear how refinancing the house incident to a divorce removing a former spouse from the mortgage will apply if the current loan was “grandfathered”.
Borrowing to buy out alimony may now require more analysis

15. Individual Income Tax (cont.)
NO CHANGE to the exclusion of Gain from Sale of Principal Residence rules – ($500,000 Married joint and $250,000 single)
STATE AND LOCAL TAX deduction is SEVERELY limited, being capped at $10,000.
NET INVESTMENT INCOME TAX of 3.8% and MEDICARE SURTAX (on wages and self-employment income) of .9% both remain (married $250,000 and $200,000 others)

16. Individual Income Tax (cont.)
For 2017 and 2018 only, the MEDICAL DEDUCTION threshold decreases to 7.5% (from 10%) of adjusted gross income (“AGI”) for all taxpayers. In 2019, threshold is restored to 10% of AGI.
50% of AGI limitation related to deduction for Charitable Contributions increased to 60%
Miscellaneous Itemized Deductions eliminated
It is unclear whether QDRO Fees MAY or MAY NOT deductible. .

17. Individual Income Tax (cont.)
Overall phase out of Itemized Deductions is eliminated
Above-the-line deduction for MOVING EXPENSES is eliminated, except for active duty members of the Armed Forces.
The exclusion from gross income for QUALIFIED MOVING EXPENSES from an employer to an employee are suspended, except for active duty members of the Armed Forces.

18. Individual Income Tax (cont.)
Changes to the CHILD TAX CREDIT
Phase out limits have increased
NEW phase-out limits begin at $400,000 (married) and $200,000 (single)
OLD phase-out began at $110,000 (married) and $75,000 (single)
Credit increased from $1,000 to $2,000 per child
Refundable component increased from $1,000 to $1,400
$500 credit for certain “non-child” dependents

19. Individual Income Tax (cont.)
In most cases, losses related to a PERSONAL CASUALTY OR THEFT LOSS will not be deductible, unless in a federally declared-disaster area
Beginning in 2018, $10,000 (per year) of distributions from a 529 plan can be used for elementary or secondary schools (public, private and religious) – PERMANENT PROVISION
May be taxable at the state level
Section 529 plans are state administered
Might be a source of funds to continue certain lifestyle choices (private school) when those plans are no longer financially feasible.

20. Alimony
EFFECTIVE FOR AGREEMENTS SIGNED OR JUDGMENTS ENTERED ON OR AFTER JANUARY 1, 2019
PERMANENT PROVISION
Payer spouse no longer able to deduct alimony paid
Payee spouse no longer taxed on alimony received
Post-judgment marital estate will be paying more income taxes.
Likely to be increased attention given to payee spouse’s NEED as opposed to payor spouse’s ability to pay
In a Post TCJA world, matrimonial litigators in most states are will focus on each party’s net after-tax income, the marital lifestyle, and the parties’ respective post-judgment budget when establishing alimony.

21. Alimony PRACTICE NOTE FOR AGREEMENTS SIGNED ON OR AFTER
JANUARY 1, 2019
To avoid a huge amount of post marital filings – especially on the smaller income cases
Consider making Alimony permanently non taxable
Decide what the driver of alimony amount was
Need - recipient spouse tax affects
Income - Payor spouse tax affect
Buyout of alimony
Making any adjustment a formula if possible, such as a percent of net, after-tax income.
Practice Note – Agreements should be creative to limit continuous litigation between the parties if modification of alimony is an issue.
Many states have not adopted this provision of the TCJA.

22. Alimony Playing with Numbers…
We’ve prepared various scenarios that are based upon actual tax returns to illustrate the changes….
Some interesting findings…

23. Scenario 1 – Mr. and Mrs. Small Double Earners
Alimony Scenarios
Scenario 1 – Mr. and Mrs. Small Double Earners
Assumptions:
Doug and Debbie both are W-2 wager earners
Doug earns $300,000; Debbie earns $80,000
There are two children; Doug will retain the exemptions in 2017
Alimony has been negotiated at $73,000 per year, taxable the payer and deductible to the recipient.
Both Doug and Debbie will itemize their deductions in 2017

24. Alimony Scenarios (cont.)
2017
2018
2019
Doug
Debbie
Gross Income
$295,415
$70,261
$75,483
$76,544
Alimony (Paid)/Received (Pre-tax)
(73,000)
73,000 -
Adjusted Gross Income
$222,415
$143,261
$148,483

25. Alimony Scenarios (cont.)
2017
2018
2019
Doug
Debbie
Adjusted Gross Income
$222,415
$143,261
$148,483
$295,415
$76,544
Itemized Deductions and Exemptions
Personal Exemptions
(12,150)
(4,050) -
Charitable Contributions
(5,460)
State/Local Taxes
(26,426)
(12,455)
(10,000)
Interest Expense
(8,000)
Misc & Employee Business Expense
(2,826)
(4,284)
Total Deductions/Exemptions from AGI
(54,862)
(26,249)
(23,460)
(15,460)
Taxable Income
$167,553
$117,012
$198,955
$133,023
$271,955
$61,084

26. Alimony Scenarios (cont.)
2017
2018
2019
Doug
Debbie
Taxable Income
$167,553
$117,012
$198,955
$133,023
$271,955
$61,084
Tax Liability
Federal
36,137
26,311
44,106
26,007
69,195
9,204
State
9,170
5,195
9,221
5,240
14,011
1,444
Total Tax Liability
45,307
31,506
53,327
31,247
83,206
10,648
Actual Alimony (Paid)/Received
(73,000)
73,000
(51,340)
51,340
Cash in Hand after Taxes/Alimony
$177,108
$111,755
$169,088
$117,236
$160,869
Effective Tax
15%
22%
18%
21%
28%
14%
Net Alimony
$62,000
$57,000
$60,000
$58,000
$51,340

27. (Approx. 33% of Earnings ∆ ) 2019 (After-tax Equivalent)
Alimony Scenarios (cont.)
Pre-Alimony Earnings
Alimony
Payor Cash Flux
Payor
Payee
2017
(Approx. 33% of Earnings ∆ )
(After-tax Equivalent)
Alimony % of Earnings ∆
Dollars
Flux %
2017 Tax
2019 Tax
Mr. & Mrs. Average Joe
$130,000
$1,500
$30,000
$27,663
31%
($3,506)
-4%
$21,348
$27,191
$1,711 $0
Mr. & Mrs. Small Double-Earner
300,000
80,000
73,000
51,340
23%
(16,239)
-9%
45,307
83,206
31,506
10,648
Mr. & Mrs. Big Double-Earner
795,000
170,000
200,000
116,750
19%
(33,093)
-7%
234,567
353,910
117,110
39,373
Mr. & Mrs. Atty-Yogi
400,000
40,000
120,000
90,651
25%
(22,650)
-12%
86,278
138,277
42,080
9,844
Mr. & Mrs. Surgeon
1,140,000
268,271
24%
(97,745)
-16%
401,975
631,449
129,593
271
Mr. & Mrs. Plumber (same $ as surgeon)
(18,558)
-3%
552,262
Mr. & Mrs. Florist
5,500,000
150,000
500,000
285,041
n/a
412,076
16%
2,357,994
2,160,877
232,633
25,737

28. Business Tax Provisions

29. Corporate Tax Rate
Flat 21% rate effective for tax years beginning after 12/31/17 – PERMANENT PROVISION.
Per IRC Section 15, new rate is prorated for fiscal year corporations
Does not require a special rate for personal service corporations
No expiration
Corporate AMT repealed for tax years beginning after 12/31/17
Reduces the 80% dividends received deduction to 65% and the 70% dividends received deduction to 50%. Also reduces the corresponding taxable income limitations.

30. Pass-Through Deduction
NEW DEDUCTION FOR 2018: The pass-through deduction is generally 20% of a taxpayer’s qualified business income (QBI) from a partnership, S corporation, or sole proprietorship, subject to limitations.
QBI is defined as the net amount of items of income, gain, deduction, and loss with respect to a qualified trade or business, excluding certain types of investment income, reasonable compensation paid to the taxpayer, and guaranteed payments to a partner.
This means that many business “owners” will not benefit without changes to their agreements. Income partners or contract partners who do not own the firm and receive guaranteed payments (salary) are not eligible. A zero percent equity owner may not qualify.

31. Pass-Through Deduction (cont.)
Service Related Business:
Certain service related businesses such as healthcare professionals, law, accounting, consulting, and financial services are NOT eligible for the deduction. Generally any service related business whose “principal asset” is the “reputation or skill” of one or more of its employees would not be eligible.
Exception for those in the engineering and architecture industries.
Unclear whether real estate brokers would be considered a service related business.

32. Pass-Through Deduction (cont.)
Exception to service business rule:
Married Filing Joint filers with taxable income less than $315,000
Other filers with taxable income less than $157,500
Does this mean that all service business owners whose taxable income is less than $315,000 will receive a 20% tax break?

33. Pass-Through Deduction (cont.)
Wage and Capital Limitation:
Does not apply to REIT dividends and qualified business income from a publicly traded partnership. REIT dividends and PTP QBI are entitled to the 20% pass-through deduction without regard to the wage and capital limitation.
For other types of QBI, applies to taxpayers whose taxable income exceeds the thresholds of $157,500 (fully phased-in at $207,500) and $315,000 (fully phased-in at $415,000) for single and MFJ filers, respectively
Limits pass-through deduction to the lesser of:
20% of the taxpayer’s combined QBI or
The greater of:
50% of the W-2 wages relating to the qualified trade or business or
25% of the W-2 wages relating to the qualified trade or business, plus 2.5% of the unadjusted basis immediately after acquisition of all qualified property.

34. Pass-Through Deduction (cont.)
Qualified Property
“Qualified property” is tangible property subject to depreciation that is in the qualified trade or business at the close of the taxable year, and which is used at any point during the taxable year in the production of qualified business income, and for which the depreciation period has not ended before the end of the taxable year.
The “depreciable period” is the period beginning on the date the property is placed in service and ending on the later of (1) the date that is 10 years after the property is placed in service, or (2) the last day of the last full year in the recovery period that would apply to the property under Section 168 (without regarding to the expensing provision under Section 168(k)).
If property is sold during the taxable year, such property is no longer available for use in connection with the qualified trade or business at the end of the taxable year and is excluded in applying the limitation for that taxable year.
The unadjusted basis of property is determined without regard to depreciation deducted with respect to the property.

35. Pass-Through Deduction (cont.)
Meaning
Now pass through business (S-corporations, partnerships, LLCs) business that have identical “income before tax” will be taxed differently depending on the amount of income, the source of that income.
For example, a successful plumber, retailer, making the same amount of money as a surgeon (above thresholds), will pay less in federal tax. This means more net cash flow.
Further, there will be a difference if either has a working spouse.
This has never been the case before.

36. Interest Deduction Limitation
Deduction for net interest expenses incurred by a business limited to the sum of business interest income, 30% of the business’s adjusted taxable income (EBITDA), and floor plan financing interest
Businesses with average annual gross receipts of $25 million or less are exempt from the limit
Disallowed interest carried forward indefinitely
Real property trades or businesses that elect to use the alternative depreciation system are not subject to the limitation
The interest deduction limit does not apply to certain regulated public utilities or to certain electric cooperatives
Applies to tax years beginning after December 31, 2017

37. 30% of Adjusted Taxable Income
A taxpayer is prohibited from deducting business interest expenses in excess of the sum of:
Business interest income; and
30% of adjusted taxable income.
Before January 1, 2022, adjusted taxable income is taxable income other than (1) items not allocable to a trade or business, (2) business interest income and deductions, (3) depreciation, amortization, and depletion, (4) the 20% deduction for business income, and (5) NOLs.
For tax years beginning on or after January 1, 2022, depreciation, amortization, and depletion are included in the calculation.

38. Real Property Trade or Business
A taxpayer can elect to be excluded from the interest deduction limitation provision if that person is engaged in real property trades or businesses.
For this purpose, a real property trade or business is any real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage trade or business.
The Conference Report makes it clear that the exception is not limited to rental businesses and indicates that it is “intended that a real property operation or a real property management trade or business includes the operation or management of a lodging facility.”
The election to be excluded form the new interest limitation provision, once made, is irrevocable.

39. Cost Recovery Provisions
Section 179
Limit increased to $1 million
Phase-out threshold increased to $2.5 million
Qualified real property now includes all qualified improvement property (i.e., qualified leasehold improvements, qualified retail property, and qualified restaurant property) and certain improvements (roofs, heating, ventilation, and air-conditioning property, fire protection and alarm systems, and security systems) made to nonresidential real property.
Depreciable lives
Qualified Improvement Property – 15 years (maybe)
Eliminates the separate definitions of “qualified leasehold improvement property”, “qualified restaurant property”, and “qualified retail improvement property”
ADS life for qualified improvement property reduced to 20 years
ADS life for residential real property reduced to 30 years
Applies to property placed in service after Dec. 31, 2017

40. Cost Recovery Provisions (cont.)
Bonus Depreciation
100% for property placed in service after September 27, 2017
Property acquired before that date, or for which there was a signed binding contract before that date, not eligible even if not placed in service
Used property eligible
Expensing rate declines from 2022 to 2026
Eligible property also includes qualified film, television, and live theatrical productions initially released, broadcast, or staged live after Sept. 27, 2017
Listed Property
The Act increases the depreciation limitations under §280F for passenger automobiles placed in service after December 31, 2017
$41,360 over the first four years
Also, computers and peripheral equipment are no longer considered listed property

41. Recovery Period for Real Property
The depreciation period for nonresidential real property and residential real property remain at 39 years and 27.5 years, respectively, but the alternative depreciation system (“ADS”) recovery period for residential rental property is reduced from 40 to 30 years. For nonresidential real property, the ADS recovery period is 40 years.
The recovery period for qualified improvement property appears to have been intended to be 15 years, with an ADS recovery period of 20 years, but a technical correction is needed to clarify this.
Qualified improvement property is qualified leasehold improvement property, qualified retail improvement property, and much of what was qualified restaurant property, along with interior building improvements (other than elevators, escalators, internal structural framework, and building expansions) placed in service after a building’s initial service date.

42. Recovery Period for Real Property
For real property trades or businesses that elect to be exempt from the limitation on interest deductions, all nonresidential real property, residential rental property, and qualified improvement property must be depreciated over the longer applicable ADS lives.
So, there’s a tradeoff for eliminating the interest deductibility limitation.
If the election is made regarding the deductibility of interest, the switch to ADS applies to all nonresidential rental property, residential rental property, and qualified improvement property, not just property placed in during beginning in 2018.

43. Real Estate Related Changes
Like-Kind Exchanges
Effective for transfers after 12/31/17, only real estate not held primarily for sale qualifies for Section 1031 exchange treatment
Personal property associated with exchanged real property is not included
Like-kind exchange no longer available for:
Equipment trade-in
Vehicle trade-in
Aircraft
Art Work .

44. Real Estate Related Changes (cont.)
Tax Credits
New Markets Tax Credit – not repealed. Allows a tax credit for qualified equity investments in a qualified community development entity (“CDE”). Allows a 5% credit for the year in which the equity interest is purchased and for each of the following 2 years, and a 6% credit for each of the following 4 years.
Low-Income Housing Tax Credit – not repealed. Claimed over a 10-year period for the cost of building rental housing occupied by tenants having income below specified levels. For non-Federally subsidized housing, the credit is designed to yield a present value of 70 percent of the qualified basis over a 10-year period. For Federally subsidizing housing, the present value is 30 percent.
Rehabilitation Tax Credit
10% Credit for pre-1936 buildings is repealed
20% credit for rehabilitation of certified historic structures and certain qualified rehabilitations is retained
Now taken ratably over 5 years starting with the year placed in service rather than all at once
Applies to amounts paid or incurred after December 31, 2017
Transition rule available

45. Real Estate Related Changes (cont.)
Carried Interests (the promotor/organizer receives a partnership interest for their efforts in lie of an actual capital contribution)
Three year holding period for capital gains in an “applicable partnership” but…
Only if the interest was transferred to the taxpayer in connection with the performance of substantial services
Doesn’t apply to capital interests
Doesn’t apply to corporations
Only for “applicable trade or business”
Raising or returning capital, and either investing in or developing specified assets
Specified assets include:
Securities
Commodities
Real estate held for rental or investment
Options or derivative contracts with respect to any of the foregoing
Some commentators think it doesn’t apply to Sec gains
Gain is triggered if transferred to someone else within three year period

46. Carried Interest
A transfer of an applicable partnership interest to a related person may trigger short-term capital gain even if the interest has been held for more than 3 years.
If the taxpayer transfers an applicable partnership interest to a person related to the taxpayer, the taxpayer shall include in gross income as short-term capital gain so much of the taxpayer’s net long-term capital gain attributable to the sale or exchange of an asset held for not more than 3 years as is allocable to the interest.
The amount included as short-term capital gain on the transfer is reduced by the amount treated as short-term capital gain on the transfer for the tax year under the general rule of the provision (that is, amounts are not double- counted).
A related person is a member of the taxpayer’s family or a person that performed a service within the current calendar year or preceding 3 calendar years in any applicable trade or business in which the taxpayer performed a service.

47. Partnership Terminations
Section 708(b)(1)(B), which provided that a partnership technically terminated if during a 12-month period there was a sale or exchange of 50% or more of partnership capital and profits, is eliminated.
A technical termination caused a re-election of accounting methods and tax elections, and resulted in the restart of depreciable lives for all partnership assets, as if the assets were newly acquired.
A technical termination often resulted in two stub-period partnership returns.

48. New Tax Code Implications for Business Valuations
Pass through deduction – not all pass through entities are “equal” any longer
Interest expense deduction – taxable income per tax returns will now be even further from the true economic “reality”
Do lower tax rates render businesses more valuable?
If not, how does the valuation professional account for the shift?
Will the new tax law up end the last 50 years of market data that we all rely upon?

49. Questions?