Congressman Kevin Brady, Chair of the House Ways and Means Committee, recently spoke to a standing-room-only audience in Weaver’s Houston office about the new Tax Cuts and Jobs Act (TCJA) and the pending “Tax Reform 2.0” legislation he hopes to introduce this year. During his presentation, Congressman Brady made the following key comments:
- Tax deduction for business meals. Congress, the Treasury Department (Treasury) and the Internal Revenue Service (IRS) are aware that there is confusion as to whether expenses incurred for certain business-related meals—specifically, meal expenses incurred to take a client or prospect to breakfast, lunch or dinner to discuss business—are still deductible. Treasury and the IRS are working on guidance that will clarify whether or not such expenses are deductible.
- Technical corrections. As with all major tax reform legislation, the TCJA contains several provisions that need technical corrections to properly reflect congressional intent. A prime example is the depreciable recovery period of “qualified improvement property.” According to the TCJA committee reports, this property is supposed to have a recovery period of 15 years, but, according to the Internal Revenue Code, it currently has a recovery period of 39 years. While it will be difficult to get all of the necessary technical corrections passed by the Senate—as doing so will require 60 votes—Congressman Brady believes there is sufficient bipartisan support to get many of the technical corrections passed.
- Tax Reform 2.0. The second round of tax reform legislation (1) will make the Section 199A qualified business income deduction and the other individual tax relief provisions contained in the TCJA permanent (they currently expire on December 31, 2025), (2) will contain “family-friendly” retirement savings provisions, and (3) may relax the rules under Internal Revenue Code Section 382 that limit the use of net operating loss carryforwards and built-in losses following an ownership change. As with the TCJA, the primary goal of Tax Reform 2.0 is to promote economic growth. In an effort to gain sufficient bipartisan support in the Senate, Tax Reform 2.0 will likely be divided into several parts that will be included in separate bills.
- Weaver can help. Weaver is committed to helping our current and prospective clients understand and navigate the potential business and personal impacts the TCJA and Tax Reform 2.0 will have. If you have any questions, reach out to your Weaver team member or contact us.
Thank you to Congressman Brady for his time and insights on the TCJA and the pending Tax Reform 2.0 legislation. If you wish to contact his office, you can do so at 202-225-4901.