Wondering how the new tax reform legislation impacts your business? Do you have a clear idea of what you need to do, how, and by when? Our tax reform playbook can help. Ask us about tax reform: www.plantemoran.com/ask

1. Tax reform:
What you can do now and how to plan ahead
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2. Plante Moran’s tax reform playbook takes a detailed look at the tax reform
opportunities and challenges most likely to impact businesses.
KEEP IN MIND
This legislation was enacted quickly, and a substantial amount of guidance will be necessary
to interpret many provisions. Further, some portions of the legislation may not have been
written correctly based on how Congress appears to have intended the law to operate.
Therefore, there certainly will be changes in how portions of this legislation will operate
going forward. Businesses will need to keep an eye on future changes to ensure any actions
taken now will work as intended.
What’s inside
THIS PLAYBOOK CONSISTS OF TWO PARTS:
What you can do now
to optimize your tax position for the 2017 tax year before it’s too late.
How to prepare
your business for 2018 and beyond.
1
2
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3. NAVIGATE THE PLAYS
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2017
PLAYS
2018
PLAYS

4. Navigate tax year 2017
Defer income; accelerate deductions
Since effective tax rates will decrease for most businesses, many planning items for the 2017 tax year revolve around deferring income into 2018 and
accelerating deductions into 2017.
For a C corporation whose tax rate is dropping from 35 to 21 percent, every dollar of accelerated deduction or deferred income generates a permanent
savings of 14 percent. Similarly, for a pass-through entity whose tax rate may be dropping from 39.6 to as low as 29.6 percent (after considering the effect
of the new qualified business income deduction), the same planning step results in a permanent savings of up to 10 percent.
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PLAY 1
Tax
accounting
methods
PLAY 2
Depreciation
PLAY 3
Retirement
plan
payments
PLAY 4
Net operating
losses and
other tax
attribute
utilization
PLAY 5
Fiscal-year
C corporations
PLAY 7
Territorial
tax system
and the
transition
tax
PLAY 8
Foreign tax
credit
utilization
PLAY 9
Accounting
method for
payments to
foreign-related
parties
PLAY 6
New
suspended
loss provision
for business
losses
C CORPORATIONS
ALL BUSINESSES
PASS-THROUGH
ENTITIES
INTERNATIONAL
BUSINESSES

5. All businesses
Check out our webinar:
Tax reform: What you need to know today
C corporations
Pass-through
entities
International
businesses
All businesses
2017 2018
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2017 PLAYS

6. Changing accounting methods or adjusting practices to maximize the benefits
of existing accounting methods are some of the most impactful planning
strategies available.
This could involve a number of areas such as:
• Paying bonus, commission, and other compensation accruals within 2½ months of year end, if using an
accounting method that permits this deduction and the accrual was fixed and determinable as of year end.
• Accelerating the deduction for real or personal property taxes.
• Fully maximizing the deduction for research and experimentation expenditures under Section 174, particularly
those otherwise included in inventory, capitalized into constructed fixed assets, or capitalized into software
development costs.
• Considering lower-of-cost or market or subnormal goods write-downs for inventory.
• Accelerating payment of certain noncompensation liabilities.
• Changing from the accrual method to the cash method if gross receipts are under the applicable threshold
for an automatic accounting method change.
• Changing from the cash method of recognizing advance payments to a one-year deferral method.
Note: Only automatic accounting method changes can be filed in 2018 and still apply to the 2017 tax year.
Tax accounting methods
Taking advantage of existing accounting methods often requires certain actions to occur within a specified period of time
after year end. Since you'll want to take time to analyze the viability of new methods and whether each is eligible as an
automatic change, it's imperative to understand the ramifications of these items and act promptly if warranted.
Bottom line
1
PLAY
APPLIES TO
All businesses
2017 PLAYS
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7. Significant changes were made to depreciation rules, including an increase in bonus
depreciation to 100 percent and the expansion of the types of assets eligible for the
new rules.
Two important planning tools for depreciation include:
2A: Properly applying new depreciation rules
The 100 percent bonus depreciation rules will apply
to assets — both new and used — that were acquired
and placed in service after Sept. 27, 2017, but only if a
written, binding contract was not in place to acquire
the property before Sept. 27, 2017.
Determining the date property is placed in service is
even more important now since property not eligible
for the new rules will only be eligible for 50 percent
expensing, and only then, if it meets the requirements
of the previous bonus depreciation rules.
2B: Depreciation accounting method changes
Another method of accelerating depreciation deductions is
to identify assets placed in service in prior years that may be
eligible for additional depreciation not previously claimed.
For example, consider the following possible actions to
accelerate depreciation expense into 2017:
• Conduct a cost segregation study for previously constructed
or purchased real property.
• Review prior capitalized repairs to determine if they can
be expensed.
• Determine whether prior assets, such as qualified
improvement property, may be eligible for bonus
depreciation that was not claimed or if property may be
eligible for shorter lives than are currently being used.
Accelerating depreciation deductions often is one of the most lucrative accounting method change opportunities. Since
most depreciation issues can be corrected through automatic accounting method changes, there is still time to move these
deductions into the 2017 tax year if warranted.
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2APPLIES TO
All businesses with
depreciable assets
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Depreciation
2017 PLAYS
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8. Taxpayers have a lot of flexibility when it comes to deducting pension plan and
other qualified retirement plan payments, because they often are able to choose
the year in which those payments will be deductible.
In order to deduct a retirement plan payment in 2017, you’ll generally need to make a payment by Sept. 15, 2018, and
report the payment on your 2017 pension plan return.
Retirement plan payments
3APPLIES TO
All businesses
with retirement
plans, particularly
defined benefit
pension plans
PLAY
Consider taking steps to allow 2018 payments to be deductible in 2017, or consider making extra payments.
These payments do have implications for the plan itself; therefore, broader consideration should also be given to:
• The ceiling on deductible pension plan contributions for 2017.
• Long-term cash flow projections with and without the excess payment.
• Change in future Pension Benefit Guaranty Corporation (PBGC) premiums resulting from a decrease in an
underfunded liability.
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9. Net operating losses (NOLs) and other tax
attribute utilization
Despite relatively good economic times for many companies, some have incurred
taxable losses, and taking advantage of decreasing tax rates may not seem
possible. However, there are still opportunities for these businesses.
For example, the business may consider maximizing an NOL in 2017 in order to carry it back to obtain refunds of tax
from earlier, higher-taxed years. Even if excess NOLs in 2017 cannot be fully carried back, it may still be advantageous to
maximize the NOL because NOL carrybacks are no longer permitted after 2017. Any losses generated in later years will
only be able to offset 80 percent of taxable income in any single year when carried forward. By accelerating losses into
2017, these limitations can be avoided. However, the 2017 NOL will be subject to the 20-year carryforward rules rather
than the unlimited carryover rules for NOLs generated in later years.
Corporations with existing NOLs may still be able to utilize those against income generated during 2017. For example, if
the corporation may be eligible to file a consolidated tax return but hasn’t historically, making that election in 2017 may
be much more favorable than in the past.
Taxpayers with NOLs or other attributes should closely analyze ways to maximize or utilize those attributes more efficiently
in 2017 before tax rates change and other loss limitations go into effect.
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4APPLIES TO
Businesses
anticipating
NOLs or excess
credits in 2017
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2017 PLAYS
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10. C corporations
All businesses C corporations
Pass-through
entities
International
businesses
2017 2018
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2017 PLAYS

11. Fiscal-year C corporations
Fiscal-year corporations have much more planning available to them than
calendar-year corporations because they still have time to take certain actions
before their year end.
For example, if an amount is only deductible if paid by year end, a fiscal-year corporation may still be able to plan
to make this payment while a calendar-year corporation can no longer take this action. Additionally, fiscal-year
corporations can still take action to defer certain transactions that may create significant income, such as the sale of
a business unit or certain related-party transactions.
In addition, fiscal-year corporations get an immediate benefit from the reduction in the corporate tax rate because
they receive a prorated tax rate in the fiscal year that straddles Dec. 31, 2017. For example, a corporation with a
March 31, 2018, year end will have a tax rate of approximately 31.5 percent on all income generated during that
year (9/12 months at 35 percent + 3/12 months at 21 percent).
Closely scrutinize all traditional deduction acceleration and income deferral techniques to determine how to maximize
savings in this decreasing tax rate environment. This is especially true for corporations that historically have not entertained
many planning opportunities related to timing differences.
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5APPLIES TO
Fiscal-year
C corporations
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12. Pass-through entities
All businesses C corporations
Pass-through
entities
International
businesses
2017 2018
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2017 PLAYS

13. New suspended loss provision for
business losses
Beginning in 2018, aggregate business losses in excess of $250,000 ($500,000
for a married taxpayer) are not deductible by an individual, estate, or trust and
must be carried forward as a net operating loss (NOL) in subsequent taxable years.
This “NOL” will be subject to all NOL carryforward rules including the rule that only permits it to offset up to 80 percent
of taxable income in future years. As NOL carrybacks are no longer allowed after 2017, many taxpayers will not have a
need for these excess business deductions anyway. However, to the extent that a taxpayer has other nonbusiness income
in excess of $250,000 ($500,000), this rule will cause tax liabilities where none had existed before.
Taxpayers who may be subject to this rule beginning in 2018 should maximize any losses in 2017 in order to preserve the
carryback of that loss, minimize the chance of being subject to this rule going forward, and even create NOL carryforwards
that will be able to offset income from all sources in future years.
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6APPLIES TO
Business owners
structured as
pass-through
entities
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14. International businesses
All businesses C corporations
Pass-through
entities
International
businesses
2017 2018
Check out our webinar:
International tax reform: A look at provisions affecting multinational businesses
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2017 PLAYS

15. Territorial tax system and the transition tax
7APPLIES TO
All taxpayers
owning a foreign
corporation
PLAY The new tax law reshapes the entire U.S. tax system as it relates to foreign
activity through the adoption of a “modified territorial” tax system.
To make the transition to this new system, earnings that have been deferred in foreign subsidiaries will be subject
to a one-time repatriation or so-called “transition” tax — 15.5 percent for earnings held in cash and 8 percent for all
other earnings.
This tax is due with the 2017 tax return but can be spread over eight years at the election of the taxpayer.
S corporations can elect to defer the tax until certain triggering events occur. State tax implications will also need to
be considered.
Closely review accumulated earnings and profits and foreign tax pools in each foreign subsidiary to determine if planning
opportunities, including accounting method changes, may exist to minimize tax. This process can be time-consuming and
should not wait.
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What does the repatriation tax mean for your international business?

16. Foreign tax credit utilization
The shift to a territorial tax system and other changes in the foreign tax credit
will result in a reduced ability to claim a foreign tax credit in future years.
In addition, the rules have become significantly more complex, and there are several gray areas awaiting more
specific guidance.
It’s critical for businesses to understand how the changes to the foreign tax credit will impact them in future years and
to look at ways to maximize their utilization of any foreign tax credits in 2017.
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8APPLIES TO
Any business that
is paying tax in
another country
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17. Accounting method for payments to
foreign-related parties
9APPLIES TO
Businesses
with foreign
subsidiaries
or foreign
parents
PLAY Some expenditures accrued to foreign-related parties cannot be deducted until
paid, but many expenditures can still be deducted when accrued.
Depending on the circumstances, this may include accrued interest, royalties, management fees, and other
similar items.
Re-evaluate accounting methods related to any items accrued to a foreign parent or subsidiary to determine if
a correction to that method is necessary and may result in a favorable treatment overall (See 2017 Play 1:
Tax accounting methods).
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18. Navigate tax year 2018
Improve your future tax position
For tax year 2018 and forward, tax planning revolves around understanding the impact of the changes in the tax law, maximizing
the impact of beneficial changes, and taking steps to minimize the impact of changes that will adversely affect your business.
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PLAY 1
Revenue
recognition
PLAY 2
Business
interest
expense
limitation
PLAY 3
Meals and
entertainment
and fringe
benefit
expenses
PLAY 4
Transactions,
mergers, and
acquisitions
(M&A)
PLAY 5
Section 1031:
Like-kind
exchanges
PLAY 6
Small taxpayer
accounting
method
considerations
PLAY 7
Employee
benefits
PLAY 8
Research credit
PLAY 9
Domestic
production
activities
deduction
(DPAD)
PLAY 10
State and
local tax
(SALT)
PLAY 11
Estate tax
changes
PLAY 12
Entity choice
PLAY 13
Qualified
business income
deduction for
pass-through
businesses
(QBID)
PLAY 14
Excess business
losses
PLAY 15
Holding periods
on profits
interests and
carried
interests
PLAY 16d
Foreign-derived
intangible
income
(FDII)
PLAY 16c
Global
intangible
low-taxed
income
(GILTI)
PLAY 16b
Base erosion
anti-abuse tax
(BEAT)
PLAY 16a
Domestic
holding
companies
PLAY 16
International
issues
ALL BUSINESSES INTERNATIONAL
BUSINESSES
PASS-THROUGH
ENTITIES

19. All businesses
2017 2018
All businesses
Pass-through
entities
International
businesses
Check out our webinar:
Tax reform: What you need to know today
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2018 PLAYS

20. Revenue recognition
Beginning in 2018, companies with audited financial statements will not be able
to defer the recognition of revenue for tax purposes any later then when recognized
on their books.
In addition, the accounting for deferred revenue, advance payments, or customer deposits may get included in taxable
income sooner than in the past. Many businesses will be implementing new generally accepted accounting principles/
International Financial Reporting Standards (GAAP/IFRS) revenue recognition accounting standards for book purposes
during 2018, which may necessitate changes in tax revenue recognition positions.
Businesses will see substantial changes in both book and tax revenue recognition rules during 2018. While some changes
may be favorable, it will be critical for companies to understand how the changes will impact their tax position long before
the end of the year to avoid surprises and ensure appropriate tax accounting method change processes are being addressed.
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1APPLIES TO
All businesses
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21. Business interest expense limitation
Beginning in 2018, the deduction for business interest expense will be
limited to the sum of business interest income plus 30 percent of the adjusted
taxable income.
Adjusted taxable income is defined as a tax-basis EBIDA (taxable income before interest, depreciation, and
amortization). However, there’s a cliff beginning in 2022 when depreciation and amortization will no longer be added
back when computing the limitation.
The limitation will apply both to C corporations and pass-through entities, but small businesses with less than $25
million in average annual gross receipts for the prior three years are exempt. Also exempted are certain industries,
including real estate activities, motor vehicle dealers, and regulated utilities.
A number of strategies exist for taxpayers who may be subject to the limitation. For example, interest could be
minimized by restructuring debt into different types of preferred equity. For taxpayers with related-party debt, planning
is especially important if interest expense will be limited while interest income remains fully taxable. Planning can take
substantial time since it often involves parties not controlled by the taxpayer. The quicker taxpayers act, the more likely
it is they will see savings.
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2APPLIES TO
All businesses
with interest
expense
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22. Meals and entertainment and fringe
benefit expenses
3APPLIES TO
All businesses
PLAY The new law bars the deduction of most business-related entertainment expenses,
which were previously 50 percent deductible.
While many meals have always been subject to a 50 percent limitation, more meals than before will be subject to it,
although some exceptions will still exist. Further, certain expenses incurred for qualified transportation fringe benefits
(e.g. parking or mass-transit benefits) and certain employee achievement awards will become nondeductible.
Taxpayers should evaluate the magnitude of expenses in this category and determine whether providing the entertainment or
other nondeductible benefits still makes sense. At a minimum, review current accounting for these expenses to determine if
alternative methods will be needed to track these expense categories separately.
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Check out our alert:
Tax reform restricts tax deductions for meals, entertainment, and
fringe benefits

23. Transactions, mergers, and acquisitions (M&A)
Several provisions of the new tax law will substantially impact business purchase
and sale transactions and may cause changes to how even routine transactions
have been conducted in the past.
Buyers might consider how to finance an acquisition in light of the interest expense limitations, whether a different
entity type is warranted, whether an acquisition of assets may allow for immediate expensing of some depreciable
assets, and how changes in future tax rates impact the value of a target or an asset basis step-up.
Sellers might consider whether their approach to an asset or equity sale still makes sense in light of rate changes, how
the sale will impact their eligibility for the qualified business income deduction (See 2018 Play 13: Eligibility for qualified
business income deduction (QBID) for pass-through businesses), and how to get the maximum value for transaction cost
deductions in light of the changes to net operating losses (NOLs) and excess business losses.
Going forward, closely review all aspects of transactions with all of the new laws in mind.
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4APPLIES TO
Businesses
entertaining
sale or purchase
transactions
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How does tax reform impact the M&A and transaction market?

24. Section 1031: Like-kind Exchanges
Section 1031 Like-kind Exchanges permit a taxpayer to defer gain on the exchange
of property used in a trade or business or held for investment.
In the past, personal property could qualify for like-kind exchange treatment, but the new law now limits this to
only real property.
This will directly impact many taxpayers that routinely sell or trade-in assets while purchasing similar equipment. This
includes taxpayers with large fleets of automobiles or heavy equipment. These transactions will no longer be eligible for
gain deferral.
This will also impact taxpayers that exchange real estate, because most real estate contains at least some elements of
personal property. This is especially true in multifamily residential property. Going forward, a like-kind exchange of a
building that includes personal property elements will result in immediate gain recognition on the personal property.
However, taxpayers are still eligible for 100 percent bonus depreciation on certain new and used personal property for
the next several years (See 2017 Play 2: Depreciation). Even if a gain is recognized on disposed property, the potential for
immediate expensing of the newly acquired property may largely mitigate the impact.
Now that personal property, such as equipment, does not qualify for gain deferral under Section 1031, taxpayers should
closely scrutinize these transactions and project out the anticipated tax results before entering into them to avoid
unexpected surprises.
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5APPLIES TO
All businesses
making like-kind
exchanges
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25. Small taxpayer accounting method
considerations
The new law opens up the cash method of accounting to taxpayers with less than
$25 million of average gross receipts over the prior three years.
These taxpayers are also exempt from inventory accounting, permitting them to account for inventory consistent
with their book method or to just capitalize materials costs. In addition, these taxpayers are exempt from the
percentage-of-completion accounting requirements.
Taxpayers that may benefit from this change should consider the impact on their businesses going forward and monitor any
potential accounting method change filings that likely will be required to implement the change. Future guidance from the IRS
will clarify this process.
Bottom line
6APPLIES TO
All businesses
with less than
$25 million in
average annual
gross receipts
over the prior
three years
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26. Employee benefits
Under the new law, some existing employee benefits change in 2018, and some
new ones have been created.
For example, reimbursement of moving expenses and qualified bicycle commuting reimbursements that were previously
excluded from income will become taxable in 2018. And employers are now permitted to claim an income tax credit in
2018 and 2019 for certain wage continuation payments made while an employee is on a family or medical leave.
Employers must re-evaluate some existing employee benefits that will no longer be excluded from employee income or
will no longer be deductible by the employer (See 2018 Play 3: Meals and entertainment and fringe benefit expenses).
Employers also should consider implementing new employee benefit arrangements that now can be subsidized with income
tax credits.
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7APPLIES TO
All businesses
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27. Research credit
The new law increases the research credit by approximately 22 percent for almost
all companies.
In addition, repeal of the corporate AMT (alternative minimum tax) will permit corporations to utilize more research
credits, since they may have been limited by the AMT in the past. Similarly, even though the individual AMT is still in
place, individuals may be able to claim more credits than they have in the past because of the increased AMT exemption
and exemption phase-out range.
Not currently taking advantage of the research credit? Consider revisiting that decision. If you are already taking advantage
of it, consider taking a deeper dive into potential qualifying activities than you have in the past.
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8APPLIES TO
All businesses
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28. Domestic production activities deduction
(DPAD)
The domestic production activities deduction (DPAD) is repealed for tax years
ending after Dec. 31, 2017.
For corporations, the loss of DPAD is more than offset by the reduction in corporate tax rates. For pass-through
businesses, the loss of DPAD should be offset by the reduction in individual tax rates combined with the qualified
business income deduction (See 2018 Play 13: Eligibility for qualified business income deduction (QBID) for
pass-through businesses).
Taxpayers should not count on DPAD being available in future years. Most pass-through businesses that previously qualified
for DPAD will likely qualify for the QBID. However, this will not always be the case, so careful scrutiny should be placed on
the QBID to ensure that the transition from DPAD to QBID is smooth.
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9APPLIES TO
Manufacturers,
real estate
developers,
and other
producers
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29. Most provisions of the new law require consideration of the impact on SALT
obligations.
State and local tax (SALT)
Taxpayers filing in a fixed conformity state can expect additional tax compliance efforts to modify federally reported taxable
income, and possibly create a pro forma federal return that aligns with the IRC version in effect for the respective state.
Businesses should also begin considering now whether the states in which they file returns may decouple from provisions
effective in the 2017 tax year. Businesses also should begin considering how these states will react to provisions effective
in the 2018 tax year when determining their 2017 extension payments and 2018 estimated tax payments. Since some of
these decisions may have to be made before there is additional clarity, begin by looking at high-priority states — those where
taxpayers conduct significant business activities and historically have had the greatest tax liability. And, in states such as
Michigan, talk to a tax advisor about the conformity date that will be most advantageous to the taxpayer’s company.
Bottom line
When trying to understand the effects of specific provisions
on SALT, businesses generally need to start by asking this
critical threshold question: What version of the Internal
Revenue Code (IRC) has, or will, the state or locality adopt?
The question refers to “conformity,” and most states fall into
one of two key types: “Rolling conformity” states follow the
current IRC, while “fixed conformity” states adopt the IRC in
effect as of a particular date.
A few states, such as California, pick and choose which parts
of the IRC they follow and which they decouple from, known
as “selective conformity.” Other outliers, such as Michigan,
default to fixed conformity but permit the taxpayer to elect
rolling conformity to the IRC currently in place.
In states with rolling conformity, the provisions likely
to have the greatest impact on SALT include bonus
depreciation, the limitation on the interest expense
deduction, and the transition tax on foreign earnings.
The details and nuances, however, are many. Additionally,
there is an expectation that states will enact amendments
to state tax laws to counter or mitigate the impact of the
changes in federal tax law, which will create an evolving
SALT landscape for the next several years.
10APPLIES TO
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30. Estate tax changes
With the new tax law come new estate, gift, and generation-skipping
transfer (GST) tax exemption amounts.
The amount individuals may transfer to heirs, free of transfer tax, increases to $11,200,000 per individual, up
from $5,600,000. This greater amount may be transferred to heirs during one’s lifetime or upon passing. Note that
the changes only apply through Dec. 31, 2025.
The current climate offers several planning opportunities, so review your estate planning documents. These are typically
drafted with formulas tied to the estate or generation-skipping transfer (GST) exemptions in place at the time of one’s death.
But the formula provisions can produce significantly different results, depending on the amount of the exemption. It’s also
important to review how your formula clauses impact your spouse and other beneficiaries.
Other opportunities may include lifetime gifting, transitioning closely held businesses, and reviewing the economics of life
insurance policies intended to provide estate tax liquidity. With the higher exemption, families no longer subject to the estate
tax may want to consider shifting focus to income tax planning to maximize the step-up in cost basis afforded to assets held
in the estate at one’s death.
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11APPLIES TO
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31. Pass-through entities
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2018 PLAYS
All businesses
Pass-through
entities
International
businesses
20182017

32. Applies toApplies to
Entity choice
Since corporate tax rates will decrease substantially while pass-through business
tax rates will decrease by a lesser amount, C corporations will look more attractive
than before.
That said, all of the many other considerations that go in to entity choice decisions won’t change. In many cases, a
pass-through structure may still be more advantageous. Making a proper determination of the ideal entity structure
requires a holistic view — not only of the tax on operating income and distributions but also of the long-term outlook
for the business. This includes your exit or transition plan, since in many cases, it can be more advantageous to sell or
transfer a pass-through entity than a C corporation.
For businesses with foreign operations, the changes to international tax provisions also have a significant impact on
this decision. Many of those provisions apply very differently to C corporations than they do to pass-through entities.
If you’ve made a decision, and you’re ready to move forward, you generally must have acted by March 15, 2018.
Otherwise, take the appropriate time to evaluate and consider the short- and long-term implications of changing entity
types before acting.
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12APPLIES TO
Businesses
structured as a
pass-through
entity
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33. Eligibility for qualified business income
deduction (QBID) for pass-through businesses
13APPLIES TO
Businesses
structured as a
pass-through
entity
PLAY Under the new law, individuals, trusts, and estates may deduct up to 20 percent of
qualified business income.
This deduction has many exceptions and limitations, including some based on the type of business, W-2 wages paid by
the business, and the cost of depreciable assets held.
Further, professional services income of an individual is only eligible for the QBID when the recipient’s taxable income
is below $207,500 for a single taxpayer and $415,000 for a married taxpayer. The benefit also begins to phase out when
taxable income approaches those amounts.
The professional services that the above limitation applies to are health, law, accounting, actuarial science, performing
arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset is
the reputation or skill of one or more of its employees or owners. The limitation also applies to the performance of
services that consist of investing and investment management, trading, or dealing in securities, partnership interests,
or commodities. The definition of each of these terms is largely unclear.
Business owners need to understand how the QBID limitations may impact them and then look at planning opportunities to
maximize the deduction. Some businesses will have to take active steps, many of which may require immediate action. This
especially includes businesses that do not employ their own workforce, that lease most assets, that structure certain business
units as separate entities, or that expect significant income to be generated through a one-time event. Professional services
businesses should begin to consider whether they may fall into one of these restricted categories, and if adjusting certain
elements of the business or spinning out certain qualifying elements of the business may be warranted.
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34. Excess business losses
New suspended loss provision for business losses discusses how aggregate business
losses will only be deductible by the individual owner of a business to the extent
it doesn’t exceed $250,000 for a single taxpayer or $500,000 for a married
taxpayer.
Pass-through entities must consider these rules in determining whether and how to take advantage of new significant tax
deductions, such as 100 percent bonus depreciation, and whether tax may be due on nonbusiness income despite being
offset by other losses in prior years.
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14APPLIES TO
Businesses
structured as
pass-through
entities
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35. Holding periods on profits interests and
carried interests
Under prior law, a taxpayer holding a profits interest in a partnership could be
allocated long-term capital gain from that interest regardless of how long they
held the profits interest or how long the partnership held the investment.
They could sell the profits interest and generate a long-term capital gain as long as they held it for at least one year.
Under the new law, the partnership must hold its underlying investment for at least three years in order for the profits
interest holder to obtain long-term capital gain treatment. Also, the profits interest holder must hold their interest for
at least three years in order to generate long-term capital gain treatment on the sale of the profits interest. This applies
to profits interest in a partnership received in exchange for services rendered in the business of:
• Raising or returning capital.
• Investing in specified assets or identifying specified assets to invest in.
• Developing specified assets.
Specified assets include corporate stock, partnership interests, debt, rental or investment real estate, commodities,
notional principal contracts, and derivatives, in addition to other investments.
Further, interests issued and outstanding prior to the enactment of the new law are still subject to the three-year
holding period for long-term capital gains recognized after Dec. 31, 2017.
Profits interest and carried interest holders should look closely at this rule to understand their tax obligations on any
recognized gains and consider whether planning may be available to avoid this rule.
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15APPLIES TO
All private equity,
venture capital,
real estate, and
similar investment
funds
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36. International businesses
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International
businesses
Pass-through
entities
All businesses
20182017
Check out our webinar:
International tax reform: A look at provisions affecting multinational businesses

37. International issues
The new tax law made significant changes to how foreign activity is taxed.
These include a shift to a territorial tax system, a minimum tax on certain corporations with payments to
foreign-related parties, a minimum tax on income earned in foreign subsidiaries, and a deduction for foreign
intangible income and exported property.
These provisions are complex and often apply very differently to C corporations versus pass-through entities, with
pass-through entities generally treated less favorably. The changes could dramatically affect the manner in which a
business should be structured or the way in which its domestic and foreign operations should interact.
All companies with foreign operations must understand how the various changes will impact them, including taking a hard
look at existing structures and operations to determine if changes are needed to avoid adverse consequences. This is
particularly true for businesses structured as pass-through entities.
Bottom line
16APPLIES TO
All businesses
with foreign
operations
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Check out our video:
Tax reform for international business — 2018 and beyond

38. Domestic holding companies
C corporation holding companies can allow for repatriation of cash from foreign
subsidiaries without any U.S. tax, since C corporations are eligible for the deduction
on foreign dividends while a pass-through entity is not eligible for the deduction.
C corporation holding companies may also allow for capital gains rates on dividends from subsidiaries in jurisdictions
without a U.S. tax treaty.
For widely held partnerships, a C corporation domestic holding company may provide a simple method of substantiating
tax residency to take advantage of tax treaties with the United States to lower withholding taxes on dividends.
S corporations and partnerships with foreign operations may benefit from forming a C corporation holding company to hold
their foreign subsidiaries.
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16aAPPLIES TO
Pass-through
businesses
with foreign
corporation
subsidiaries
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39. Base erosion anti-abuse tax (BEAT)
The new law imposes a minimum tax on a corporation’s modified taxable income —
5 percent in 2018, 10 percent from 2019 to 2025, and 12.5 percent thereafter.
Modified taxable income adds back certain deductible payments to foreign-related parties, potentially including
addbacks of a portion of net operating losses (NOLs). These corporations will pay the higher of regular tax or the BEAT,
similar to how the alternative minimum tax (AMT) has historically operated.
The new law provides for the use of transfer pricing analyses to reduce the impact of BEAT on charges for certain low-
value intercompany services. An effectively documented application of the Services Cost Method (SCM) is an essential
tax-planning tool.
If you are a large corporation and make significant payments to foreign-related parties, you may be subject to the BEAT.
You should immediately review whether this is the case and determine if there are planning opportunities to reduce this tax.
Bottom line
16bAPPLIES TO
C corporations
with gross receipts
over $500 million
and a base erosion
percentage of at
least 3 percent
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40. Global intangible low-taxed income (GILTI)Applies to
The GILTI effectively repeals the deferral or exclusion of U.S. tax on foreign
earnings by immediately subjecting certain foreign subsidiary earnings to tax.
A corporate parent is subject to a 10.5 percent rate, while an individual owner pays tax at ordinary rates
(up to 37 percent). GILTI also has a reduced deemed foreign tax credit.
If you have more than 10 percent ownership in a profitable foreign subsidiary, you’ll want to forecast the GILTI impact.
Individuals may be able to elect to postpone the tax under certain circumstances. For corporations, although GILTI is subject
to a lower tax rate, certain situations might cause the effective rate to actually be higher, making it even more necessary to
begin modeling the impacts immediately.
Consider a review of transfer pricing policies to optimize foreign subsidiary profitability, consistent with that entity’s
functions and risks and applicable local transfer pricing rules.
Bottom line
16cAPPLIES TO
Any U.S. person
owning
10 percent
or more of a
foreign
corporation
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41. Foreign-derived intangible income (FDII)
This new provision offers a 37.5 percent deduction on qualifying income, bringing
the effective tax rate to 13.125 percent.
These effective tax rates will increase after 2025. FDII is particularly beneficial to C corporations that are not
capital-intensive. The deduction is allowed for foreign-owned C corporations too.
If you are a C corporation with significant taxable income attributable to foreign customers, this provision is definitely worth
a closer look.
For foreign customers that are related parties, revised transfer pricing could increase FDII, consistent with each entity’s
functions and risks and applicable local transfer pricing rules.
S corporations and partnerships may consider establishing a domestic corporation to house export activity and take
advantage of this provision.
Bottom line
16dAPPLIES TO
C corporations
with customers
outside the
United States
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42. Change is here.
Don’t wait to define
your plays.
Many of the tax-planning strategies in this playbook may require quick action
either to implement a change or to start a process of further evaluation. That's why
it's so important to understand and assess all the factors relevant to your business
immediately.
Mike Monaghan
Partner, National Tax Office
586-416-4943
mike.monaghan@plantemoran.com
Kurt Piwko
Partner, National Tax Office
586-416-4948
kurt.piwko@plantemoran.com
Have questions? Give us a call.
Our deep technical knowledge helps companies like yours uncover potential new savings
opportunities. And, with over 90 years of business experience and expertise, we also
provide the meaningful insights that help you focus: Position your business for success.
Reach your goals. Make the mark.
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43. Want more?
Check out our full tax reform toolkit — including short videos,
in-depth webinars, and a variety of other resources — at
plantemoran.com/taxreform.
Plante Moran is among the nation’s largest certified public accounting and
business advisory firms. For more than 90 years, we’ve helped our clients achieve
their business and personal goals — to make the mark. Our more than 2,200 audit,
tax, consulting and wealth management professionals and staff deliver seamless,
fully integrated services to clients across the United States and around the world.
Respected for our personal touch and deep expertise, Plante Moran has been
recognized by a number of organizations, including Fortune magazine, as one of
the country’s best places to work.
Plante Moran is a founding member of Praxity, AISBL, the world’s largest alliance of
independent audit, tax, and consulting firms with more than 41,000 professionals
in over 100 countries.
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