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AMT still has an impact under the new law: Tax Strategy Scan

Our weekly roundup of tax-related investment strategies and news your clients may be thinking about.

Clients beware: AMT can still have an impact some despite new law
Although the alternative minimum tax rules have become more lenient under the new tax law, high-income investors should not become complacent as they may still be subject to the rule, according to CNBC. “Which taxpayers are likely to be affected the most? Taxpayers with large families, employees who claimed a large amount of employee business expenses, very successful small business owners,” an expert says.

Private equity firms may not receive their rewards as quickly under the overhaul, which was signed into law by President Trump in December.
U.S. President Donald Trump signs a tax-overhaul bill into law in the Oval Office of the White House in Washington, D.C., U.S., on Friday, Dec. 22, 2017. This week House Republicans passed the most extensive rewrite of the U.S. tax code in more than 30 years, hours after the Senate passed the legislation, handing Trump his first major legislative victory providing a permanent tax cut for corporations and shorter-term relief for individuals. Photographer: Mike Theiler/Pool via Bloomberg

How to help clients understand cryptocurrency tax obligations
Clients are scrambling to have a better understanding of crytocurrency taxation rules, according to this article on Nasdaq. Regulators, meanwhile, are stepping up efforts to provide clear guidance and address confusion coming from investors. Government agencies are rushing to catch up, and that means an already uncertain tax landscape is constantly transforming," according to an expert. "For crypto investors who do not stay in the know, that could mean large and unnecessary tax bills.”

Should a client’s business be a C corporation or pass-through entity under the new law?
More business owners are looking at whether changing their business structures from a traditional C corporation to a pass-through entity or not, according to this article on MarketWatch. That's because of the new flat 21% corporate federal income tax rate under the new tax law and the qualified business income deduction for pass-through income. Under the same circumstances, the new corporate tax rate makes C corporations more attractive, but some firms will be better off becoming pass-through entities in some circumstances.

Can a reverse mortgage help save an underfunded retirement?
Clients with home equity have the option of applying for a reverse mortgage to shore up their nest egg, according to this Washington Post columnist. However, they are advised to account for tax and other policy changes before making a decision. "Reverse mortgages may be a tool that is appropriate sometimes, but it should be considered a last resort,” an expert says.

A majority of affluent Americans are likely to adjust their financial plans under the new law, according to the AICPA. Here's how advisors can help.
April 19

Which is better for business owners: Compensation or dividends?
The tax deduction for qualified business income under the new law is prompting many businesses to consider whether increasing compensation or dividends to maximize savings, an expert writes at the Albuquerque Business Journal. "However, the decision as to restructuring compensation and dividends is really unique to each business," writes the expert. "The analysis has to be done based on the particular circumstances of each business."

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