The Tax Cuts and Jobs Act (the “Act”) contains provisions which should make buyers and sellers of businesses happy. The increased immediate deduction for the purchase of equipment and computer software, reported in a prior M & A Nugget when the change was pending, was included in the final Act, although at a lesser increase than was contained in the proposed law. The Act doubles the deductible amount from $500,000 to $1,000,000.00. The current $2,000,000.00 phase out trigger was increased to $2,500,000.00. Sellers (and therefore buyers) will benefit from lower tax rates on a sale of business. C corporations will benefit because of the substantial decline in the corporate tax rate to 21%. Sellers of S corporations will also benefit in two ways. The individual tax rates have been lowered. In addition, pass through entities, like S corporations and limited liability companies, get a new deduction equal to 20% of taxable income. This means less income passing through to the owners, and therefore less tax. Happy Holidays to all.
ABOUT GLENN D. SOLOMON
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Glenn D. Solomon is a principal at Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years. He has extensive experience in the purchase and sale of businesses, structuring ownership agreements, and advising companies in financial distress.
ABOUT OFFIT KURMAN
Offit Kurman is one of the fastest-growing, full-service law firms in the Mid-Atlantic region. With over 130 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our ten offices serve individual and corporate clients in the Maryland, Delaware, New Jersey, and Northern Virginia markets, as well as the Washington DC, Baltimore, Philadelphia, and New York City metropolitan areas. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.
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