Triple Play is a weekly NJBIZ feature that asks top executives in New Jersey to talk about three things related to their industry.
Michael Greenwald is a partner and corporate and business tax practice leader at Friedman LLP Accountants and Advisors, which has offices in East Hanover, Marlton, Linwood, Cape May and Toms River.
Here are three key points that Michael believes local businesses should know about taxes in advance of the election.
Deductibility of business interest expenses could be on the chopping block: Economists seem to think it is good public policy since it theoretically makes businesses indifferent between borrowing and raising capital. If tax rates are drastically reduced, full or partial elimination of interest deductions could be the revenue offset. (On the other hand, your mortgage interest deduction is probably safe.)
Section 1031 like-kind exchanges could be limited: The president has called for limiting or eliminating this tax deferral. House Republicans proposed a similar measure. Such bipartisan support might mean this tax deferral mechanism is also a good revenue offset for other tax reductions, but don’t underestimate the real estate lobby, since the vast majority of high value like-kind exchanges are of real property.
New partnership audit rules are coming from the IRS: Congress changed the rules on how the IRS audits partnerships in 2015, with an effective date in 2018. In the meantime, the IRS has to write the regulations implementing the new procedures and its proposal, subject to comment before finalizing, is due later this year. If you do business as a partnership or an LLC, the time is now to start discussing these new rules with your accountant and attorney.