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Business-Related Provisions of the 2017 Tax Cuts and Jobs Act

 
Author(s): Samuel C. Thompson, Jr.
Practice Area: Tax
Published: May 2018
ISBN: 9781402411526
PLI Item #: 245289

Business-Related Provisions of the 2017 Tax Cuts and Jobs Act breaks down and discusses the impact of many of the complex provisions of the 2017 Tax Cuts and Jobs Act (the “TCAJA”) on domestic and international business operations of C corporations, S corporations, and partnerships. The article is organized in ten sections as follows:

  1. Introduction
  2. The individual “Rate Structure Changes” for both ordinary income and capital gains
  3. The corporate rate structure changes, including the individual tax on dividends and the dividends received deduction
  4. New Section 199A, which provides for a deduction for certain flow-through business income of sole proprietorships, partnerships, and S corporations
  5. A “First Take” on the impact of the TCAJA on the choice of form decision for domestic operations: C corporation, or flow-through entity
  6. The new limitation on the deduction for business interest;
  7. The treatment under the TCAJA of carried interest, that is, profits interest earned by certain hedge fund and private equity managers
  8. Several significant changes impacting both individuals and corporations: (1) the depreciation rules, (2) the Section 179 deduction, (3) changes to the net operating loss deduction, (4) the limitation on excess business losses of an individual, and (5) changes to the like kind exchange provision, Section 1031
  9. Several changes in the international tax arena, including (1) the adoption of a territorial system, (2) the tax on the elimination of the deferral benefit, (3) the taxation of foreign high return amounts, (4) the anti-base erosion rules, and (5) restrictions on income shifting through transfers of intangibles
  10. A “First Take” on the TCAJA’s impact on the domestic M&A, that is, (1) taxable asset acquisitions, (2) taxable stock acquisitions, and (3) acquisitive reorganizations
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I am a Professor of Law and Director of Penn State Law Center for the Study of Mergers and Acquisitions.  The Center examines corporate, securities, tax, antitrust, and other legal and economic issues that can arise in mergers and acquisitions (M&A).    

Before joining Penn State, I was a Professor of Law at the UCLA School of Law and director of the UCLA Law Center for the Study of Mergers and Acquisitions. I formerly served as the Dean of the University of Miami School of Law, and I have been (1) a professor and distinguished visiting professor at the University of Virginia School of Law, and (2) the Jacquin D. Bierman Visiting Professor of Taxation at the Yale Law School. I started my teaching career at the Northwestern University School of Law. 

My teaching and scholarly interests focus principally on all areas of M&A as well as corporate tax, international tax, and general issues affecting the economy. I am the author of numerous books and articles, including the following books, among others:  

(1) Mergers Acquisitions and Tender Offers, a four volume treatise published by the Practicing Law Institute in 2010 and updated every six months;

(2) Business Planning for Mergers and Acquisitions, a law school casebook, which is in its third edition, published by Carolina Academic Press; 

(3) Citizen’s Guide to U.S. Economic Growth and the Obama-Romney Economic Debate, which I self-published with iUniverse in2012; and

(4) A Practitioner's Guide to the Economics of the Antitrust Merger Guidelines, published by the ABA-ALI in 1997. 

Throughout my career I have held a number of legal positions in private practice, government, and consulting, including the following:

  • Partner-in-Charge of the Tax Department of Schiff Hardin LLP in Chicago;
  • Tax Policy Advisor, on behalf of the U.S. Treasury Tax Assistance Office, to the South African Ministry of Finance in Pretoria, South Africa;
  • Attorney-Fellow in the Securities and Exchange Commission’s Merger and Acquisitions Office;
  • Consultant on merger and acquisition issues to the Federal Trade Commission;
  • Professor in residence at the European Commission’s Antitrust Merger Taskforce in Brussels; and
  • Consultant, on behalf of the International Monetary Fund, to several Caribbean countries regarding the potential harmonization of their Takeover Laws. 

On several occasions, I have testified about tax policy before the U.S. House of Representatives.

I have my (1)J.D. from the University of Pennsylvania School of Law; (2) LLM, in Taxation, from the NYU School of Law; (3) MA in Business and Applied Economics jointly from the University of Pennsylvania Graduate School of Economics and the Wharton School; and (4) BS from West Chester University, where I was a member of the varsity football team.  I served as a captain in the USMC during the Viet Nam war.   .