As we all know, the President signed the sweeping tax reform bill ushering in a broad range of changes including new rules for income tax rates and deductions, college for savings incentives, estate planning and corporate taxes. These new rules are leaving folks scratching their heads and scrambling to find out what the most sweeping tax reform package in decades means and what actions to consider.
In my last article I wrote about the importance of passing on some of the benefits to increase employees’ salaries and 401K’s so I’ll continue in this article by saying that retirement savings incentives apparently will be unaffected. To get a clear understanding, everyone should consult with tax professionals to evaluate their personal circumstances and money management but financial advisers say the new rules do not call for changes to existing retirement savings incentives, preserving the favorable tax treatment and contribution limits to 401 (k)s and other retirement savings accounts.
Below are some key takeaways from tax reform bill:
Temporary increase in federal estate tax exemption
The law will roughly double the federal estate tax exemption to $11 million per person ($22 million per couple). That limit will be indexed to inflation, but would expire and revert back to current law after 2025.
Beneficiaries will still get a step up in basis, meaning there would be no capital gains tax due on inherited assets at the time of the transfer, and the cost basis - the value used to compute tax liability - would be reset to the price at that date.
It is important to note that state level estate tax exemptions are often much lower than the federal level and are unaffected by this law. In addition, the temporary nature of the higher limit means that if you have an estate plan, you should proceed carefully before making any changes.
While a further increase in the estate tax exemption will help some families avoid this tax at the federal level, it remains important for all households to have a current estate plan that helps ensure their wishes are carried out and reduces the cost of transferring assets as part of an estate.
New corporate tax rate and pass-through tax rate
Corporate tax rates will be cut to 21% beginning in this year. That tax cut is not scheduled to expire.
Pass-through businesses, businesses structured as sole proprietorships, partnerships, and S-corporations, will be taxed at individual tax rates, but will be able to deduct 20% of income. To prevent high-income individuals from taking advantage of this deduction, it would only be available to couples filing jointly with incomes below $315,000. For income above that level, the rules are complex but it appears that certain kinds of businesses might still be eligible for a partial deduction.
The plan would let businesses fully expense new equipment right away, but the provision would eventually expire.
The bottom line
There are a few things you may want to consider in light of the new legislation, and may want to consult with a tax professional about, so you can be prepared.
• Rethink your mortgages and deductions: If you have traditionally made charitable gifts or benefited from the mortgage interest or state and local tax deduction, you want to look at how the new standard deduction will impact you. If it no longer makes sense to deduct these expenses, you may want to rethink your mortgage or giving strategy. The imposition of a cap on state and local tax deductions may also impact where some people choose to live in retirement.
• Estate tax: Even in the absence of tax reform, it makes sense to periodically review your estate plan. If the estate tax limit changes are relevant to your plan, it may make even more sense to revisit your strategy. You may want to meet with your estate planning attorney.
• Small-business income: If you own a small business, you may want to reconsider how you structure your income and the form of your enterprise. Depending on the size and particulars of your business, you may want to consider the benefits of incorporation or the restructuring of pass-through organizations. Consult with an expert in small-business taxation.
• Timing corporate expenses: With new rules in place temporarily for expensing capital equipment purchases, business owners may want to review their capital expenditure plans.
I trust the Oxnard business community will find this information useful.
Gabriel's House: Providing faith-based healing and wholeness to the formerly homeless women and children of Oxnard
Gabriel’s House is a non-profit emergency shelter and transitional living home located in Oxnard dedicated to serving the formerly homeless women and their children of Ventura County. Since opening in 2011, Gabriel's House has provided emergency shelter and case management services to over 400 residents with over 300 (75%) of these residents moving into stable or long-term housing programs. With 20 emergency service beds and six private family rooms, Gabriel’s House can serve up to 40 women, children, and babies at one time.
The City of Oxnard has recently chosen Gabriel’s House to be the site of Ventura County’s newest, expanded emergency shelter. This new multi-story unit, located immediately next to Gabriel’s House in Oxnard, will double or triple Gabriel’s House’s existing emergency shelter capacity. The cry and vision of Gabriel’s House is that no woman or child in our community should have to sleep outside.
Gabriel’s House is more than a comfortably furnished home on two green acres in a quiet neighborhood with security. It is an entire community of caregivers committed to serving each individual as a person, not as a case. It is a place to call home and truly be part of a family. You can learn more about Gabriel’s House at gabriel's-house.org. Requests to learn more or to get involved with Gabriel’s House can be sent to email@example.com or by calling (805) 487-3445.
State agencies must take seriously the requirement to conduct a timely, accurate economic analysis of major regulations, according to a just-released opinion by the 5th District Court of Appeal.
In a unanimous opinion upholding the trial court, the appellate justices found that the final economic impact analysis used in rulemaking must be based on evidence, as must the responses to public comments regarding nonspeculative economic impacts which introduce new evidence into the rulemaking file.
The California Chamber of Commerce filed a friend-of-the-court brief in the case.
The court also ruled that a state agency must address both intrastate and interstate economic competitiveness impacts and concerns.
In deciding this case, the appellate court rejected the application of a deferential standard of review to the state agency’s interpretation of its obligations under the Administrative Procedures Act (APA). In effect, the court held that the agency doesn’t get to decide for itself what the Legislature meant by holding the agency accountable.
The APA ruling in this dispute, John R. Lawson Rock & Oil, Inc. and California Trucking Association v. State Air Resources Board et al., Case No. F074003, centered around the adequacy of the economic analysis conducted by the Air Resources Board (ARB) when it adopted an amendment to a rule regulating diesel truck engines.
The California Trucking Association successfully argued that the analysis was a “rosy scenario without merit,” and that the economic analysis “merely evaluated the Amendments’ ‘benefits,’ and did not include any analysis of the Amendments’ potential ‘adverse economic impact[s]’ on affected businesses.”
The appellate court found that behavior unacceptable.
The court also rejected the agency’s willful ignorance of evidence of additional economic impacts, developed through the APA’s iterative regulatory analysis and review process.
That is, once an agency is made aware of relevant economic information—especially potentially adverse economic impacts—then it must address those impacts in good faith as it completes its final economic analysis.
The requirement that agencies conduct rigorous economic impact analyses was enacted by the Legislature in 2011 (SB 617; R. Calderon; D-Montebello). The CalChamber was a key supporter of the legislation and has worked closely with the Department of Finance to develop the rules by which agencies must comply with these requirements.
Joining the CalChamber in filing the amicus curiae brief in this case were the California Manufacturers and Technology Association, California Business Properties Association, California Retailers Association, Consumer Specialty Products Association, California Independent Oil Marketers Association, Automotive Specialty Products Alliance, National Elevator Industry and Pacific Merchant Shipping Association.
Learn how to get the most out of your listing on our website. See what complimentary promotional opportunities are available to both new and veteran members. Can participation on a Chamber committee help your business?
It's all available at the February 27 New Member Mingle. "Seasoned" members are also welcome.
The Chamber's Director of Communications, Janet Pozos, will be on hand to demonstrate how easy it is to link your social media accounts to your Chamber web listing. Members can also offer discounts or coupons to fellow Chamber members or the general public.
Meet some Chamber Board members, the Chamber staff, and your fellow newbies!
The New Member Mingle is free to attend. It will be in the Chamber office (400 E. Esplanade Drive, Suite 302) on February 27 from 4:30 to 6:00 PM. Refreshments, wine and hors d'oeuvres will be served.
Click here to let us know you are coming!
The Economic Development Collaborative–Ventura County’s special services coordinator, Clare Briglio, has announced additional resources now available for businesses recovering from the impact of the Thomas Fire and subsequent floods and mudslides.
“New federal declarations have secured additional resources for those who have suffered personal and/or business injury as a result of the Thomas Fire and subsequent mudslides and floods,” explained Briglio. “To take full advantage of these new federal resources, business owners are encouraged to follow this three-step process. For direct in-person assistance in filing with FEMA or the SBA, please visit a Disaster Recovery Center in your area. In addition, EDC-VC has compiled an online list of resources at http://edc-vc.com/disaster-recovery-services/.”
To access available federal fire and flood relief resources, people should follow this three-step process:
Step 1: Registration with FEMA- Clients who have been impacted by the Thomas Fire and subsequent flood and are interested in government assistance should apply online at DisasterAssistance.gov or by phone at 1-800-621-3362. The toll-free numbers are open 7 a.m. to 10 p.m. seven days a week.
NOTE: The filing deadline to return FEMA applications for property damage is March 16, 2018. The deadline to return economic injury applications is Oct. 15, 2018.
Applicants should have the following information at hand:
· Social Security number.
· Address of the damaged primary residence.
· Description of the damage.
· Information about insurance coverage.
· A current contact telephone number.
· An address where they can receive mail.
· Bank account and routing numbers for direct deposit of funds.
Step 2: Registration with the SBA for low-interest loans- Low-interest disaster loans from the U.S. Small Business Administration (SBA) are available for businesses of all sizes (including landlords), private non-profit organizations, homeowners and renters. Disaster loans cover losses not fully compensated by insurance or other recoveries. This includes Economic Injury Disaster loans for businesses that may or may not have sustained any damage, but have experienced a downturn in business because of the disaster. The SBA customer service center is also available to answer questions at 1-800-659-2955. Applicants may also come in to a Local Recovery Center (LRC) for person-to-person assistance in completing their applications. For further information, visit SBA’s website at www.sba.gov/disaster.
Step 3: Registration with EDD for unemployment benefits- Federal Disaster Unemployment Assistance (DUA) benefits are now available for workers, business owners and self-employed individuals who lost their jobs or had their work hours substantially reduced as a result of the wildfires and associated flooding, mudslides and debris flows in Santa Barbara and Ventura counties. Those affected are encourages to apply online at https://eapply4ui.edd.ca.gov/, by calling 1-800-300-5616 (English) 1-800-326-8937 (Spanish) or by visiting a Local Recovery Center (see locations below).
Local Recovery Centers (LRC) - Two Disaster Recovery Centers are now open locally for personal and business assistance. Representatives from FEMA, SBA, OES and other agencies will be present to provide information and resources for economic and personal injury due to the Thomas Fire and subsequent floods. Locations are as follows:
1 N Calle Cesar Chavez #21
Santa Barbara, Ca 93103
Saturday 10-2 pm
Ventura County Credit Union
6026 Telephone Rd
Ventura, CA 93003
Saturday 9-1 pm
RESOURCES FOR FARMERS AND RANCHERS- The U.S. Department of Agriculture's Farm Service Agency has opened a temporary satellite office this week in Ventura County to help farmers and ranchers who suffered losses in the Thomas Fire apply for federal disaster recovery assistance.
Agricultural Commissioner's Office
815 E. Santa Barbara St.
Santa Paula, CA 93060
Hours of operation
Thursday, January 18, 8 a.m. to noon
Thursday, January 25, 10 a.m.-2 p.m.
Thursday, February 1, 10 a.m.-2 p.m.
Thursday, February 8, 10 a.m.-2 p.m.
Thursday, February 15, 10 a.m.-2 p.m.
Thursday, February 22, 10 a.m. -2 p.m.
Applicants are asked to call the Santa Barbara FSA office at 805-928-9269 to schedule an appointment, but drop-ins are also welcome.
The SBDC is funded by the SBA and provides professional business assistance at no cost to businesses. Participating businesses are required to follow a well-defined scope of work and report their economic successes. These SBA milestones are defined as job creation, increase in sales, capital investment, jobs retained and businesses started.
EDC-VC is a private, nonprofit organization that serves as a business-to-government liaison to assist businesses in Ventura County by offering programs that enhance the economic vitality of the region. For more information about the Small Business Development Center, loan programs, manufacturing outreach and international trade program, or other services available to small businesses through EDC-VC, contact Bruce Stenslie at 805-384-1800 ext. 24 or firstname.lastname@example.org. Or visit www.edc-vc.com.