Pub. 5 2016-2017 Issue 3

12 San Diego Dealer A SEASON OF CHANGE – OPPORTUNITIES FOR THE PROACTIVE DEALER By Sid Tobiason, CPA and Partner; and Amy Stillwell, CPA and Senior Manager, Moss Adams LLP W ith a new administration in the White House, we can likely expect to see large changes to the current tax structure. Without being proactive, this could mean yet another increase in dealership over- head. So how do you stay ahead on a road that has yet to be paved? This article will discuss some of the tax changes currently being pro- posed and what you can do to plan ahead. While theTrump campaign created a“TrumpTax Plan,”House Republicans created a committee with a similar proposal called the “Tax Reform Task Force Blueprint” (the Blueprint). The likely result is that any new legislation will have some elements of both plans, as well as other changes that have not yet been proposed or discussed. In this article we will be discussing primarily the Blueprint, since legislation will begin in the House. The Blueprint currently proposed by House Republicans begins with tax reductions, includ- ing a reduction in the top individual income tax rate from the current high of 39.6 percent to 33 percent. But this 17% decrease comes at a hidden cost: most itemized deductions could be eliminated, leaving only home mortgage interest and charitable contributions. The top business income tax rate may also be reduced to as low as 25% on pass-through entities. However, you need to consider how your business is structured and how much your owners are paid in wages, as these items may dramatically impact your future tax bill. Tax increase provisions in the Blueprint include eliminating or limiting the business interest We don’t yet know how flexible these changes will be, but being proactive in your planning now can mean significant tax savings later.