Tax considerations amid legislative uncertainty

00;00;03;04 - 00;00;24;23

Speaker 1 (Damien Martin)

You're listening to Elements of Private Tax, the EY Podcast dedicated to breaking the intricate world of private tax into practical insights you can use today. One element at a time. This is your host, Damien Martin, a partner in our EY Private Client Financial Services practice and alongside, my co-host Tony Nitti, a partner in our EY Private Client National Tax Office.

 

00;00;24;25 - 00;00;52;13

Speaker 1

We're talking with our former colleague and guest, David Kirk, about how he's thinking about tax planning in 2025 with what's being dubbed the Super Bowl of tax legislation on the horizon. So whether you're a tax director, a family business owner, a private capital investor, or you're just someone who's interested in learning more about private tax, grab your chips and guac and get ready for the big game, where we'll be exploring the element of uncertainty and tax policy with actionable advice and perhaps a few dad joke,

 

00;00;52;15 - 00;00;54;26

Speaker 1

Super Bowl references along the way.

 

00;00;56;22 - 00;01;08;00

Speaker 1

To get us started. I'm going to go ahead and turn it over to Mr. Nitti here to set up our conversation for the day by telling us about the significance of 2025 and what happens in the current law at the end of the year.

 

00;01;08;15 - 00;01;32;04

Speaker 2 (Tony Nitti)

Sure. Yeah. Damian. Yes. Good to be here. You and I are no strangers to doing podcast together. And now we get to do it under the EY banner. And like you said, what better way to start than kind of this tax cliff here, if you will, that we're facing 10 months from now. And maybe the best way to present what we're dealing with is to kind of go back in time a little bit and explain why we're dealing with it.

 

00;01;32;06 - 00;02;11;05

Speaker 2

And so if we go back to 2017, right when we woke up in 2016, in President Trump's first term, Republicans had control, as they do today of the White House, House and Senate. And when the stars aligned like that for one party, they can pass their vision of tax reform without any opposition from the other party, because while normally when a bill gets to the Senate, it's going to require 60 votes, which is going to require some type of bipartisan agreement, when you have one party in control of the White House, House and the Senate, you can use this streamlined budget reconciliation process.

 

00;02;11;08 - 00;02;29;12

Speaker 2

And that process allows you, when you get to the Senate, to not need 60 votes, you just need a simple majority. And so, since the Republicans had that majority in both the House and the Senate, they could pass their vision of tax reform without a single vote from the Democrats. And so that's what they set out to do there

 

00;02;29;18 - 00;02;52;10

Speaker 2

as 2017 was coming to a close, was to enact this Tax Cuts and Jobs Act without, any Democratic buy-in. You can't just use budget reconciliation with impunity. Right. There are certain fiscal constraints that you have to meet. Number one, which is something we're seeing play out in real time right now, is the House and Senate have to pass joint budget resolutions.

 

00;02;52;17 - 00;03;01;14

Speaker 2

That kind of sets the cap, if you will, of how much in the way of tax cuts that we have an appetite for enacting over the next 10 years at the budget window.

 

00;03;01;14 - 00;03;04;14

Speaker 1

I'm going to jump in here real quick to reconcile things.

 

00;03;04;16 - 00;03;40;15

Speaker 1

Pun intended there. To the developments since Tony, Dave and I first sat down. The House took a big step late in the evening on February 25th by adopting a fiscal year 2025 budget resolution with a vote of 217 to 215. The House resolution requires at least $2 trillion in deficit reductions from other committees to avail the House Ways and Means Committee of a full $4.5 trillion net deficit increase for tax cuts, a minimum of $1.5 trillion, and mandatory spending cuts is required, including $880 billion from the Energy and Commerce Committee that has jurisdiction over Medicaid.

 

00;03;40;17 - 00;04;07;20

Speaker 1

The total tax amount will be reduced by the amount tax savings are short of the $2 trillion amount. The next step? House leaders will now negotiate a compromise budget resolution with the Senate. So it sets up the actual reconciliation legislation. What's required? Threading a very small needle, to use Speaker Johnson's words, given the differences between the House and the Senate resolutions and the delicate balance that was struck to get the House resolution adopted by the narrowest margin possible.

 

00;04;07;23 - 00;04;14;06

Speaker 1

Speaking of the Senate, let's get back to Tony, who is just about to tell us about the second of the fiscal constraints that he mentioned.

 

00;04;14;06 - 00;04;31;25

Speaker 2

And then beyond that, you have this, this Byrd Rule that's probably the lesser understood of the two requirements. And the Byrd Rule just says, hey, you can kind of do whatever you agree to over the 10-year budget window, but you cannot add to the deficit beyond that 10-year budget window.

 

00;04;31;27 - 00;04;49;07

Speaker 2

And so when the Republicans were putting together the Tax Cuts and Jobs Act at the tail end of 2017, they were able to keep the total kind of price tag below the $1.5 trillion in cuts that was kind of designated as part of the joint budget resolutions

 

00;04;49;07 - 00;04;51;10

Speaker 1

but they were running into a Byrd Rule problem,

 

00;04;51;10 - 00;04;54;25

Speaker 2

right? They were adding to the deficit beyond the 10-year budget window.

 

00;04;54;27 - 00;05;08;21

Speaker 2

And so the way they chose to address that was to take all of the individual cuts that were part of the TCJA and basically have them expire after eight years. Well, the end of eight years

 

00;05;08;21 - 00;05;09;11

Speaker 2

is the end of

 

00;05;09;11 - 00;05;10;14

Speaker 2

2025.

 

00;05;10;16 - 00;05;17;08

Speaker 2

And so now, what was once way off in future, now, the clock is winding down and winding down fast.

 

00;05;17;08 - 00;05;21;15

Speaker 2

And so when that clock strikes midnight on New Year's Eve

 

00;05;21;15 - 00;05;22;18

Speaker 2

2025,

 

00;05;22;18 - 00;05;42;25

Speaker 2

kind of like, like Cinderella's carriage reverting back into a pumpkin. Right? All of these individual cuts that were enacted as part of the TCJA, they're going to sunset and revert back to 2017 law. So the lower individual rates are going to sunset to the top individual rate at 37%, it’s going to become 39.6%.

 

00;05;42;28 - 00;06;07;02

Speaker 2

Maybe much more meaningfully, the [Section] 199 cap A, 20% deduction for pass-through businesses that was born as part of TCJA, that's going to just disappear when we get to 2026 if Congress doesn't act. The double the state tax exemption, cut in half; the double standard deduction, cut in half. And so that kind of bill, if you will, of kicking the can down the road eight years, is now coming due.

 

00;06;07;04 - 00;06;36;14

Speaker 2

And so we're in kind of a, a much-watched television situation here for the next 10 months because where much of the tax law, as we've come to know it since 2017, hangs in the balance. And, yeah, that's going to be kind of where we have to focus our attention because what the gamble the Republicans were making back in 2017 was that when the TCJA started to expire in 2025, they would have requisite control necessary to extend it

 

00;06;36;14 - 00;07;03;27

Speaker 2

and that gamble ended up paying off, because now we are in a situation where, once again, the Republicans control the White House, House and Senate. And so one would think that the overwhelming priority would be to simply push through those extended, those expiring provisions in what's known as TCJA 2.0. But shoot, you and Kirk and I, we could spend hours talking about how that's easier said than done.

 

00;07;03;29 - 00;07;29;19

Speaker 2

But rather than spend those hours, we can just look at recent history and remind ourselves that in 2020, when the Democrats controlled the White House, House and Senate, they couldn't stay unified enough as a party to push through President Biden's broader agenda. And even back in 2016, when you think about President Trump's first term. Yeah, the Republican state unified enough to push through the TCJA, but they didn't stay unified enough to repeal Obamacare.

 

00;07;29;22 - 00;07;47;00

Speaker 2

And so just because one party's in control of the White House, House and Senate, and just because they can use budget reconciliation to pass a tax bill without opposition from the other party, doesn't always mean it's going to be a slam dunk, obviously, that it's going to get done. And so I think that's where, again, all eyes are going to be for the next

 

00;07;47;00 - 00;07;47;19

Speaker 2

ten months.

 

00;07;47;22 - 00;07;52;27

Speaker 2

How does this unfold? And what does it mean for us in the tax industry and for our clients?

 

00;07;52;29 - 00;08;05;11

Speaker 1

Tony, I think you laid that out perfectly, set it up perfectly. So with all of that in mind, Dave, how are you thinking about legislation or the prospect thereof in the next, 10 or so months here?

 

00;08;05;13 - 00;08;44;07

Speaker 3 (David Kirk)

Well, we're just looking at 2025. I think we need to go back to the day of the election for a moment, because regardless of how, you know, each individual citizen of, of the United States felt about the outcome of the election, there was, you know, maybe deep down inside, even the staunchest of Democrats might have had sort of a sigh of relief when it came to taxes. That we were, you know, the smart money was really on having divided government.

 

00;08;44;10 - 00;09;12;16

Speaker 3

And there really was a red wave. Now, you know, the way Tony said it was, you know, I think going to be a little bit, foretelling about what it's going to look like over the next eight months because during Biden's term, we had the Build Back Better attempt where they had a very slim margin in both the House and the Senate.

 

00;09;12;16 - 00;09;56;16

Speaker 3

And we saw, you know, defections, if you would call that from Manchin and Sinema that wouldn't allow them to pass what they wanted to coming through the Senate because of these Democrats that kind of were operating more as kind of independents that didn't kind of fall in line behind the party line. And that may be the case going into 2025, because what we've seen is that there is a three majority in the Senate, right?

 

00;09;56;16 - 00;10;36;05

Speaker 3

So it's 53/47. So, you can lose three votes in the Senate to get a 50/50 tie, which then JD Vance will come in and surely break it in favor of passing something. So okay, fine. So you can lose three. But in the House, that one's a little bit more variable because, yes, they have a majority. But the Trump administration has also picked off several of them to take spots in the Executive Branch.

 

00;10;36;07 - 00;11;06;12

Speaker 3

And unlike in the Senate, where if you remove a senator or if a senator dies, or what happens that that the governor of a state appoints a replacement senator. In the House, you have these special elections, and these special elections will probably happen April-ish May-ish time frame. So, between now and those special elections, your Republican control of the House is down to less than a handful, like two.

 

00;11;06;14 - 00;11;37;16

Speaker 3

And so there is some question about whether the Republicans can have everybody in the House fall in line within these next few months before those special elections happen. And if that turns out to not be the case, then the question on timing of the tax bill then comes into play.

 

00;11;37;16 - 00;11;53;21

Speaker 3

Now, I would say that if they would actually listen to the American public or what we are hearing from clients is clients do not want this tax side to go down to the wire, right?

 

00;11;53;23 - 00;12;25;17

Speaker 3

Businesses, even individuals planning. You do not want to have a mad rush in the month of December. Everyone would very much like this to be settled by June so that you know what your facts are, your “rules of the road” you're “playing field” in 25 and you know what it's going to be in 26, 27, 28, 29. That may or may not actually happen.

 

00;12;25;19 - 00;12;45;07

Speaker 3

And so, you know, things like, hey, do I buy new machinery? Well, maybe bonus depreciation might come back. Maybe that will be effective back to 1/1 of 25. Maybe it won't. Maybe it will be effective one 1/1/26. Maybe they won't be able to touch bonus depreciation.

 

00;12;45;07 - 00;12;58;05

Speaker 1

I can touch this bonus depreciation topic. If you aren't sure what it is. Bonus depreciation allows an immediate deduction of a significant percentage of the cost of eligible assets in the year that are placed in service, rather than depreciating them over time.

 

00;12;58;07 - 00;13;17;27

Speaker 1

The TCJA brought us 100% bonus depreciation for qualified property acquired and placed in service between September 27, 2017 and December 31, 2022. Beginning in 2023, this percentage began phasing down by 20% per year and is currently scheduled to be eliminated in 2027, absent action in Washington.

 

00;13;18;21 - 00;13;44;05

Speaker 3

And so does that then influence if I'm, if I'm going to put in a new machine, am I going to buy that machine in 25 or am I going to buy that in 26? And so it really is impacting businesses’ everyday decisions the longer this thing drags out. And so there is pressure that should be felt by Congress the longer this drags out.

 

00;13;44;07 - 00;14;03;23

Speaker 3

But it's not that the Republicans don't want TCJA, right? 2.0 as Tony called it. It's that there is a faction of the Republican Party that does not want to spend

 

00;14;03;23 - 00;14;26;04

Speaker 3

$4 trillion to do a wholesale extension for 10 years. Right? There are deficit hawks, right? Because that's what this is. It is getting tax cuts and issuing bonds that are likely going to be purchased by foreign governments that our children and grandchildren are going to have to repay.

 

00;14;26;07 - 00;14;48;09

Speaker 3

And there's a piece of the Republican Party that says $4.7 trillion is way too high, that maybe they're going to have to bring it down in a total package, and maybe they could find spending cuts of $2 trillion. So that brings the total package down to 2.5. Maybe that's enough for the entire Republican Party in both the House and the Senate to swallow.

 

00;14;48;11 - 00;15;03;19

Speaker 3

But given TCJA only cost about $1.5 trillion, that are they willing to go to $2 trillion, 2.5 where it is. That's the sausage. That's where the sausage is being made right now.

 

00;15;03;19 - 00;15;10;06

Speaker 3

Okay, now we have the sausage casing, which is our budgetary number.

 

00;15;10;08 - 00;15;39;08

Speaker 3

Now, the House and the Senate are going to go and fill their respective sausages with their own combinations of meat and spices. They're not going to be identical. And so then they're going to have to get together and actually compromise amongst themselves. And that's where the rubber is really going to meet the road. So we're really just in the first quarter of a four-quarter game.

 

00;15;39;10 - 00;16;09;18

Speaker 3

We just don't know exactly when the game is going to end because the speed in which they can go through each quarter is within control of Congress and the White House. And for us on the outside, we're just kind of sitting and watching. So, Damian, I think that's where I'm at for 2025. Is, I'm sitting, I'm watching. I'm cautiously optimistic that we are going to get something that doesn't come down to the wire, like as a Christmas package.

 

00;16;09;20 - 00;16;15;23

Speaker 3

But, you know, Washington is a strange place, so we'll just have to see.

 

00;16;15;25 - 00;16;35;09

Speaker 2

You make a good point, Dave. Like, I mean, in this recent history is any indication, I guess, right? I mean, it was the end of December. As I'm remembering and I do remember personally very well. Right? That that's when we saw the TCJA kind of really come together. And you know, err, was effective in large part, you know, a few days later.

 

00;16;35;09 - 00;17;02;29

Speaker 2

So, I mean, I guess in light of all that, you know, people still need to decide if they're buying that machine or not or, you know, making business decisions and planning for investments or whatever it might be. How do you do that then, Dave? In this environment when you're saying we're kind of in the first quarter, but, you know, I actually need to make decisions now or in the near future to decide if I, if I, you know, I'm going to buy that machine.

 

00;17;03;02 - 00;17;26;26

Speaker 3

Well, you know, the old tax tail should never wag the dog, right? That if you need a new machine or if your truck breaks down and you need to buy a new one, you're going to buy a new truck, because that's what the business necessities require. And now maybe if it's discretionary, do I buy another truck? A third truck? Or a fourth truck? Right? To expand my workforce?

 

00;17;26;28 - 00;18;14;28

Speaker 3

Maybe that's where these kind of decisions come into play. But, you know, I would probably say, look, historically speaking, rates are about as low as they're going to get, okay? Whether you're talking about corporate or whether you're talking about individuals that are operating businesses in pass-through form, 37% as the highest individual rack rate is historically very low when you add in 199 cap A, bringing business rates down to a top of 29.6% is historically a record.

 

00;18;15;01 - 00;18;42;02

Speaker 3

Now, there has been talk about dropping the corporate rate down, you know, maybe to 15%. Right? But the rule of thumb would be that every percent of the corporate rate they change is $100 billion over 10 years. So if they want to take it from 21 down to 15, that's going to cost them $600 billion that they need to find someplace else, whether that's spending cuts or increasing taxes someplace else.

 

00;18;42;04 - 00;19;17;25

Speaker 3

And so Trump had, candidate Trump, had talked about that. Not really sure President Trump now facing the reality of having to work with the Congress, which is not always bullied into whatever he wants, that, you know, I think the general gist, though, is that rates are not going to get much lower. And so that would mean that, okay, you would want to in, in okay ...

 

00;19;17;28 - 00;19;51;16

Speaker 3

how about this … in a rising rate in environment you would want to accelerate income into lower rates first, higher rates later. But you would defer deductions into higher rates in the later. But now if we're looking at a situation where there's at least a 50/50 chance that rates are going to be stagnant, right, stay where they are. 199 A gets extended, the rate brackets stay the same.

 

00;19;51;19 - 00;20;11;11

Speaker 3

Then whether you put that machine or that truck in service or not in 25 vs. 26, that then determines … is really if rates are neutral, then you're looking at, well, what are they going to do with bonus depreciation? What are they going to do with 163 J?

 

00;20;11;14 - 00;20;34;28

Speaker 1

As a reminder the TCJA made changes that expanded Section 163 J, which outside of certain exceptions and accepted businesses, generally limit the deduction for business-interest expense in any tax year at the taxpayer level to the sum of business interest income for the tax year, 30% of adjusted taxable income for the tax year, but not less than zero, and floor plan financing interest for the year.

 

00;20;35;01 - 00;20;47;09

Speaker 1

Adjusted taxable income was initially calculated using an EBITA-like approach, but starting in 2022, depreciation and amortization are no longer added back, effectively reducing the allowable interest deduction.

 

00;20;47;11 - 00;20;55;28

Speaker 3

Which have generally been bipartisan ideas, right? To extend this. And that is where

 

00;20;55;28 - 00;20;57;00

Speaker 3

you're going to have to go …

 

00;20;57;00 - 00;21;27;25

Speaker 3

… well, are Republicans going to go alone or are Democrats going to come in and maybe potentially vote for a few favorable things, the SALT [state and local tax] cap being one of them, right? Nobody likes the SALT cap on individuals, but it's so expensive that what are you going to do to offset it? And so yeah, rates are one piece …  but it's what goes into the computation of your taxable income … is also very much in play.

 

00;21;28;04 - 00;21;32;01

Speaker 1

Tony, I don’t know, what do you think? What's your what's your take on all this here?

 

00;21;32;03 - 00;21;35;20

Speaker 2

Listening to DK go through this, two things pop into my mind

 

00;21;35;20 - 00;21;54;08

Speaker 2

Yeah, the idea of, you know, $4.5 trillion price tag for TCJA 2.0 over 10 years, relative to a $1.5 trillion price tag for TCJA 1.0 that is obviously going to, to ruffle feathers at this stage for some of the deficit hawks in Congress.

 

00;21;54;11 - 00;22;18;19

Speaker 2

What I'm curious to see is the messaging that's going to come out over the next few months, because I think what we're going to see, right, is messaging that tilts towards, say, look, let's look at this less from a current law baseline and more of a current policy baseline. And so with the current policy baseline, you know, the messaging would be these TCJA provisions are current law, right?

 

00;22;18;19 - 00;22;38;20

Speaker 2

Like they are in effect now. And if we pretend that they just stay in effect forever, then extending them doesn't actually add to the deficit at all. And I'm going to be curious to see how much ... you know, what's fun about tax reform is tax law. What we do for a living kind of rises to the forefront of the public consciousness.

 

00;22;38;20 - 00;22;58;14

Speaker 2

Like, it's not just dorks like us talking about tax law, it's on the front page of every paper and it's on morning radio shows. And, you know, you start to learn about these concepts that only arise during tax reform time, like, dynamic vs. static scoring. Right? Remember how much we talked about that in 2017 to measure the effect of tax cuts?

 

00;22;58;17 - 00;23;22;27

Speaker 2

Well, I'm curious how much, everyday people are going to learn about the difference between current law and current policy baseline, because I do think the messaging coming out of the Republican Party to try to win over the deficit hawks is going to be, hey, we're just extending cuts that are already in place. And so if you measure those cuts again, against the current policy baseline, where these cuts remain in effect forever, we aren’t really adding to the deficit at all.

 

00;23;22;27 - 00;23;54;02

Speaker 2

And so that's how you can justify voting for these bills despite being a deficit hawk. So that's one thing I’m curious to see unfold. And then Dave just alluded to the SALT cap. And I just cannot wait to see what direction this is going to go. Because, you know, the House a couple of weeks ago released kind of its menu, if you will, you know, like imagine, you know, when you see Andy Reid, holding up that huge play calling sheet and, just kind of picking and choosing what he wants to run on third and seven …

 

00;23;54;08 - 00;24;17;13

Speaker 2

… you know, the House kind of released their big menu of different things … they can raise revenue to pay for cuts elsewhere or some additional cuts. And, man, the SALT cap was all over the map. I mean, there's proposals to eliminate the SALT deduction entirely, not only for individuals but for businesses. I mean, obviously that's a nice pay for other cuts

 

00;24;17;13 - 00;24;40;21

Speaker 2

but can you imagine the controversy that would arise in high income tax states as they already have like California, New York, New Jersey? There's talks about subtly raising the cap, doing away with the cap. I mean, it's the full gamut of possibilities when it comes to the SALT cap. So, I'm curious to see where the horse trading eventually evolves with respect to the state and local tax deduction

 

00;24;40;21 - 00;24;47;22

Speaker 2

and I have no idea how to predict where that's going to end. But, like I said, to me, it'll be one of the more fascinating subplots.

 

00;24;47;29 - 00;25;09;01

Speaker 1

I'm going to interrupt here real quick to say, I do think that's a fascinating subplot, Tony, and it's for sure something I'm closely watching as well. Now I'm a guy who likes numbers. I mean, I am a tax accountant after all. And personally, I find it helpful to know what numbers are associated with the expected cost or revenue raised by the various provisions, as it can help inform thinking as to where all this might end up

 

00;25;09;01 - 00;25;39;02

Speaker 1

when the horse trading is done. The gradients of the SALT cap math from the House GOP Budget Committee menu that Tony just referred to range from $1 trillion in 10-year tax savings relative to the TCJA extension, with a wholesale elimination of the individual end business SALT deduction to a $5 billion price tag relative to the TCJA extension if the cap was increased to $15,000 for single taxpayers and $30,000 for married filing joint, with a few hundred billion dollar ideas in between.

 

00;25;39;04 - 00;25;53;29

Speaker 1

And to Tony's point on the current law vs. current policy issue, House speaker Mike Johnson indicated on February 26, 2025, that he hopes to use a current policy baseline that does not count the cost of tax cut extensions in the eventual budget reconciliation bill.

 

00;25;53;29 - 00;25;59;08

Speaker 1

Now, let's get back to our discussion with what I think is a great next topic and question to tackle.

 

00;25;59;12 - 00;26;00;29

Speaker 1

If I do say so myself.

 

00;26;01;05 - 00;26;19;17

Speaker 1

All right. So I think you've teed this up or there's a lot of uncertainty. But I know one thing that, I think is a very frequent topic and I want to hear both of your takes on this. You both also did an article on this topic of, you know, you got to decide your choice of entity in this environment, right?

 

00;26;19;20 - 00;26;33;00

Speaker 1

I mean, and that's one of those things, I'm going to go back to your sausage making metaphor there, Dave and I kind of want you to put the casing on. It's a little harder to kind of change your you know, if you're angle from a bratwurst to, I don't know whatever else. Right? You know, it's a little harder to do that.

 

00;26;33;00 - 00;26;50;10

Speaker 1

Right? So. So, Dave, what do you do when you're faced with choice of entity, either starting a new or making a change and probably should also, you know, set us up here a little bit too on like what are the considerations, the differences in your choice of entity considerations?

 

00;26;50;23 - 00;27;21;25

Speaker 3

You know, when you're dealing with choice of entity, you know, it was prior to TCJA and basically after 1986 that most people were in pass-through form unless they were public or going public or had very, very strong reasons that they were not. And maybe because they' had been a corporation for 80 years and they're stuck there, or they couldn't necessarily make an S election or whatever it was …

 

00;27;21;27 - 00;28;08;06

Speaker 3

But now when corporate rates fell below the individual rate, which has not happened since, oh, God, decades, that, you now have a very legitimate question. Is, you know, if I'm a business and I pay, or I make a $100 of income and I'm looking at, well, if I'm a Corp, I'm paying $21 or if I'm a pass-through, I have to say, well, am I getting the benefit of the QBI [Qualified Business Income] deduction under section 199 A or not?

 

00;28;08;06 - 00;28;37;09

Speaker 3

Because if I'm not, I'm paying tax at 37 maybe with NIIT [net investment income tax] involved on it, 40-ish, 40.8, with QBI I'm at 29.6 with NIIT, I add another .38. And so, you know, at a macro level, it doesn't seem to make sense to be a pass-through entity because my corporate rate is 21.

 

00;28;37;11 - 00;29;00;29

Speaker 3

But then you have to ask yourself, well, corporations, they're still subject to two levels of tax. And so if I need money coming out of that corporation, whether it's for lifestyle or what have you, then I am paying double level of tax. So I'm paying 21 on the inside and then my dividend is going to come out at 23.8.

 

00;29;01;02 - 00;29;03;22

Speaker 3

And when I add those two numbers together,

 

00;29;03;22 - 00;29;05;28

Speaker 3

I'm in the low 40s,

 

00;29;05;28 - 00;29;08;17

Speaker 3

which is almost about a push

 

00;29;08;17 - 00;29;09;25

Speaker 3

between

 

00;29;09;25 - 00;29;14;24

Speaker 3

not being subject to, you know, being a pass-through entity and not being subject to

 

00;29;14;24 - 00;29;16;07

Speaker 3

199 A

 

00;29;16;07 - 00;29;17;15

Speaker 3

and so

 

00;29;17;15 - 00;29;21;09

Speaker 3

in this year, if I'm starting a business,

 

00;29;21;09 - 00;29;27;13

Speaker 3

this is a really tough year to be making a choice of entity because we don't know where individual rates are going to go.

 

00;29;27;14 - 00;29;59;04

Speaker 3

We don't know where corporate rates are going to go because it's entirely possible that they don't take the 21% and raise it to 25, because back in 17, no one thought that they would ever get to 21. Everyone was kind of totally fine with 25. And I think the general industry is okay with 25 now. And so again, going back to our rule of thumb is one point is a $100 billion that maybe they use the corporate rate to bounce up to 25%, to get an extra $400 billion that they can spend on the SALT cap or whatever it is.

 

00;29;59;10 - 00;30;00;08

Speaker 3

And so

 

00;30;00;08 - 00;30;02;08

Speaker 3

you're really in this kind of

 

00;30;02;08 - 00;30;08;14

Speaker 3

strange spot. But, you know, I don't know, I'll throw this over to Tony and say, well,

 

00;30;08;14 - 00;30;11;07

Speaker 3

Tony, like we've done a lot of modeling

 

00;30;11;07 - 00;30;12;08

Speaker 3

on

 

00;30;12;08 - 00;30;23;15

Speaker 3

pass-through vs. corp. And there are kind of some rules of thumb that we've kind of seen as kind of transient rule of thumb, not the actual deal.

 

00;30;23;22 - 00;30;29;05

Speaker 3

Every situation is different, but general rules of thumb that we're seeing, if you take out

 

00;30;29;05 - 00;30;32;09

Speaker 3

large quantities of money out of the business for personal use,

 

00;30;32;09 - 00;30;43;09

Speaker 3

well, then there's one answer. If you keep it inside the business and reinvest, there's another answer. And so and so … what historically have you seen doing these choice of entity models over the last couple of years?

 

00;30;43;17 - 00;30;45;16

Speaker 3

That is informative going forward?

 

00;30;45;19 - 00;31;18;27

Speaker 2

One of the ways that question gets posed to me a lot is what the maps look like right now on pass-through vs. corporate? And as you just said, to check that math, whatever it looks like, it's written in pencil and not print, because we just don't have the inputs and let's be honest, right prior to the election, when we were working with pass-throughs that were considering whether the grass is greener as C Corps, we were preparing for a landscape that did not come to pass because, as Dave said earlier today, the safe money was on a split Congress.

 

00;31;19;00 - 00;31;50;01

Speaker 2

And so with a split Congress and the safe money would also be on some parts or all of the TCJA expiring, particularly because the Democrats had nothing to do with TCJA at one point. And so with that math, we were anticipating the real distinct possibility that 199 cap A was going to expire and suddenly, overnight on 1/1/26, pass-through businesses were going to see their top rate rise from 29.6% to 39.6%.

 

00;31;50;04 - 00;32;15;24

Speaker 2

That's a 40%, you know, day-after-day hit or day-over-day hit, I should say, that businesses were really going to have to prepare for it from a cash perspective. And so that was kind of a big motivation. Is that anticipation that 199 cap A was maybe better than coin flip odds are likely to expire waking up on November 5th and see Republicans in control of the White House, House and Senate,

 

00;32;15;24 - 00;32;31;20

Speaker 2

of course, we have to change our default setting and at least presume that it's better than coin flip odds that 199 cap A is going to stick around. And so the math is still fluctuating because you just heard Dave say corporate rate could go up. You also heard him saying earlier, rightly, that,

 

00;32;31;20 - 00;32;33;20

Speaker 2

the corporate rate could go down.

 

00;32;33;22 - 00;32;46;21

Speaker 2

And so, you know, all of that math it just has to be in pencil. And so when I counsel people right now, people still want to talk about it, you know, is life better off as a corporation? It's a really tricky thing because

 

00;32;46;21 - 00;32;58;25

Speaker 2

we want as much information as possible that’s solid to make that decision because going into corporate form, it's fairly easy, getting out of corporate …

 

00;32;58;28 - 00;33;21;19

Speaker 2

not so easy, right? Let's think about it from the perspective of an LLC that wants to flip over to a C corporation. That can generally be done tax free under a Section 351 type situation. I mean, that can be consequences if your liabilities exceed the tax base of your assets in a 357 C, but you can flip from an LLC to a C, generally tax free.

 

00;33;21;19 - 00;33;42;01

Speaker 2

But if you don't like life as a C, you're certainly not going back to life as an LLC without a taxable liquidation. And so your only option would be to elect S if you want to get back into pass-through status and you have to be eligible to be an S. If you're an S Corp and you're thinking about revoking, which is probably the more common fact pattern that we encounter, if you’re thinking about revoking your S election

 

00;33;42;01 - 00;34;00;09

Speaker 2

to take advantage of that 21% corporate rate; you don't get to just dip your toes into the pool and see if you like it. If you revoke your S election, you can't make a new S election for five years. And so you really need to think long and hard about these decisions to go into corporate form, because they're very difficult to unwind.

 

00;34;00;11 - 00;34;22;24

Speaker 2

And so finally, to today's point about, you know, besides tax rates, what are we considering? Well, if we think about it from the prospect of an S Corp that wants to look at potentially going to a C corporation, I always start with something that maybe not everyone thinks and but, you know, your accumulated adjustments account as an S corp. That's a very valuable attribute.

 

00;34;22;27 - 00;34;50;24

Speaker 2

That is something that you've created over your life as an S Corp that represents the amount you can distribute tax free to the shareholders as long as they have enough basis to support it. So if you've accumulated, you know, tens of millions or even hundreds of millions in an accumulated adjustments account (AAA), and you want to have slip over to being a C corporation, unless you have a plan to purge that AAA account within a year of revoking your election, you're going to waste an unbelievably valuable attribute.

 

00;34;50;26 - 00;35;19;15

Speaker 2

And so that could be a barrier to entry before you even consider things like tax rates. Beyond that, obviously, as we said, one of the biggest factors is 199 cap A. But if we're just kind of set aside tax rates for a moment, like Dave said, what are your cash needs? Because the more you need to extract cash out of your corporation, the more than double tax is going to hit, and the more the pendulum's going swing in the direction of just staying put as a pass-through entity.

 

00;35;19;17 - 00;35;43;00

Speaker 2

Of course, there's tremendous savings to be had as a C Corp if you just leave all the cash in and reinvested in the business. But we have penalty tax regimes that prevent that, right? We have the accumulated earnings tax and personal holding company tax is two regimes that, as Dave said, we haven't had to think about since 1985, because who wanted to stash their money in a corporation from 86 until 2017?

 

00;35;43;03 - 00;36;06;05

Speaker 2

But those two regimes are going to make it very difficult to solely enjoy the benefit of a 21% corporate rate by preserving all the cash inside the business and not distributing it out to the shareholders and incurring that second level of tax. But clearly, as you plan to reinvest more into the business, a C Corp does start to look attractive because the double-edged sword of pass-through taxation is …

 

00;36;06;12 - 00;36;21;01

Speaker 2

yeah, the good news is you only pay one level of tax: the individual level. The bad news is you pay that level of tax whether you take the distributions out of the business or not. And so if you're going to be putting most of the money back into the business, sure, a C Corp tends to make more sense.

 

00;36;21;03 - 00;36;41;07

Speaker 2

But the biggest thing, day-in and day-in, I mean, like the biggest thing businesses have to consider is, right, math is math, a 21% corporate rate is going to look pretty attractive. And if you're not taking distributions, the math is probably going to show that you're going to benefit year after year being a C Corp, being a C Corp relative to a pass-through business.

 

00;36;41;09 - 00;37;11;26

Speaker 2

But you have to look at the full picture. And the full picture is what happens if I sell that business. What happens if somebody comes along and makes a godfather offer to buy up my company? And as a C corporation, if you're going to sell within, say, you know, 8 to 12 years of converting to a C Corp, boy, it is very likely that any savings you enjoyed year over year, they are going to get more than wiped out by the pain that would come upon sale.

 

00;37;11;28 - 00;37;34;03

Speaker 2

Just because as a C Corp, as you're earning this income every year, your basis isn't moving in your C Corp stock. And so you're either going to get hit with double tax upon sale of the C Corp’s assets or if you sell the stock, you're just going to have this historic low basis that's going to have a much larger gain result from it than if you sold as an S corp.

 

00;37;34;03 - 00;37;56;17

Speaker 2

And so that's one of the things you really have to think about if you're looking at converting to a C corporation, but think, hey, in my perfect world, I'd be selling this business within the next decade, well, it's going to change the math significantly. And, you have to look at that, that full picture to really understand whether it makes sense.

 

00;37;56;23 - 00;38;19;17

Speaker 2

But the biggest message is one that Dave was kind of alluding to earlier. It's just we are in such a state of uncertainty that can we afford to wait a few months and see how things are going to play out. Obviously, we have limited time windows if we want to revoke an S election and have it effective January 1, 2026, we're going to need to know what we want to do by March 15, 2026.

 

00;38;19;17 - 00;38;41;24

Speaker 2

And so it's a tough game to play right now because we just don't have all the inputs and as Dave said, that timeline is playing out right now in real time. And so we could have inputs by June. You might be sitting here, as you said, Damian, at Christmas again, like we were in 2017, finally starting to get an idea of what life is going to be like for our business in the next year.

 

00;38;42;01 - 00;38;45;06

Speaker 2

How nimble, reactive can we be at that point in time?

 

00;38;45;08 - 00;38;48;21

Speaker 1

Dave, what do you think of all that? I mean, I guess in light of all that. Right?

 

00;38;48;26 - 00;38;55;24

Speaker 3

So just to kind of buttress what Tony said about choice of entities. So one, we also have to think about

 

00;38;55;24 - 00;38;57;10

Speaker 3

step up in basis.

 

00;38;57;10 - 00;39;04;24

Speaker 3

If closely held business and you have owners that are, you know, closer to their expiration date than they are, they're born on date

 

00;39;04;24 - 00;39;05;23

Speaker 3

that

 

00;39;05;23 - 00;39;10;22

Speaker 3

you won't get a step up inside the business assets in

 

00;39;10;22 - 00;39;13;21

Speaker 3

corporate form, whether that's S Corp or

 

00;39;13;21 - 00;39;14;12

Speaker 3

C Corp.

 

00;39;14;18 - 00;39;37;17

Speaker 3

But you would in a partnership. Now a lot of people that have done, you know, very sophisticated planning have their businesses in trusts that are outside of their estate, potentially GST [generation skipping trusts] protected trusts that are going to go on for generations and generations. So you're taking … that basically takes the step up off the table.

 

00;39;37;17 - 00;39;52;05

Speaker 3

And so does that then mean, hey, if you're not going to get a giant step up in the assets of the business, then does that make corporation a little bit more attractive than it would be otherwise?

 

00;39;52;13 - 00;40;19;19

Speaker 3

And then and then second, and this is sort of the last part, is that there's not necessarily a requirement that it's an all or nothing. This is not a binary decision. I mean, yes, being a corporation is being a corporation. But, you know, you could have, you know, imagine that you make, you know, I don't know, toilet paper and you have these giant plants that make toilet paper.

 

00;40;19;19 - 00;40;52;03

Speaker 3

Well, there's no reason that the plants themselves have to be inside of corporate solution. You could create a PropCo, an OpCo where you can extract money out of the business by renting the real property into the business that makes the toilet paper. And so as the revenues come in, you could pull it out and have that real property rental qualify for NIIT exclusion.

 

00;40;52;05 - 00;41;06;12

Speaker 3

It could qualify for 199 A. And so you could kind of split the baby in something like that. Right? So that it doesn't necessarily mean your business needs to be all one thing or all the other, being a hybrid

 

00;41;06;12 - 00;41;15;24

Speaker 3

is a perfectly reasonable middle road for both business expansion and for kind of hedging the tax risk.

 

00;41;15;27 - 00;41;33;24

Speaker 1

So I'm going to throw you a curveball here that maybe comes into the equation when we look at the estate tax, you talk about the step up in basis and maybe where that goes because I know there's been the lease proposals have been floated out there by, say, Senate Majority Leader Thune, for example, of repealing the estate tax.

 

00;41;33;26 - 00;41;45;28

Speaker 1

And so maybe that's in the cards, which I'll leave it to you on what that means for step up in basis, but so that how does that enter the equation when you're again doing the overlay on estate planning in that type of a scenario?

 

00;41;46;00 - 00;42;14;10

Speaker 3

One of the big things, and I don't know if we've really, really touched on, is the exemption being $14 million a head right now and the potential for that rolling back basically being cut in half. And, you know, I think the keeping the exemption where it is, for the next 10 years, you know, basically doubled the amount, $14 million, you know, annually adjusted upwards for inflation.

 

00;42;14;12 - 00;42;54;04

Speaker 3

That has a total cost of about $180 billion, give or take a few billion. And, you know, that's not a big number in the greater scheme of things. You know, the SALT cap alone is almost a trillion. And so like this is relatively small potatoes and, but and so I do believe when in a Republican-controlled Washington, the way we have it now that the exemption is largely, you know, double keeping it where it is or extending it, making it permanent, what have you is, is a pretty safe bet.

 

00;42;54;06 - 00;43;25;00

Speaker 3

You know, not 100%, but, you know, still very good, right? Definitely, more likely than not, probably should. But getting rid of the estate tax entirely, I know that is one of the tenants of, you know, kind of the Republicans as they, they generally don't like it. But then you have to ask, well, if we get rid of that estate tax, do we then have … what do we do with the step up in basis?

 

00;43;25;00 - 00;43;42;06

Speaker 3

Do we still allow the step up and basis? Do we get rid of it? Do we do a hybrid like they did in 2010 when the estate tax went away? Everyone remembers that year because when George Steinbrenner died, they gave $2 million of step up and then everything else was not subject to the step up or something along those lines.

 

00;43;42;06 - 00;44;05;22

Speaker 3

So that was example of kind of splitting the baby. But you have to kind of think about this when you're doing planning of both income tax planning and estate tax planning, because, you know, at the end of the day, a lot of these estate planning strategies: grats, gifts during lifetime, sales to defective trusts, all they are doing is substituting an income tax down the line for estate tax savings

 

00;44;05;24 - 00;44;51;20

Speaker 3

today. Right? And so when it was 55% estate tax and you know, basically 40% income tax, well that trade off was a no brainer. But now if you have real estate that has negative basis, right? You've been relying on debt and your step up might be 120 cents on the dollar. Actually paying estate tax might actually be cheaper mathematically than trying to give it away during life and have your heirs pay income tax on 120% of the fair market value because of the liability piece.

 

00;44;51;23 - 00;45;17;26

Speaker 3

So, you know, you in any planning, whether it's about a family business or whether it's, you know, you’re a family office that has liquid or marketable or PE investments and hedge or whatever it is that you still need to be able to balance estate taxes, income taxes, state income taxes, state inheritance taxes. Right? So it's almost a Rubik's Cube going on here.

 

00;45;18;03 - 00;45;28;14

Speaker 3

And one side, two sides, three sides might change while the other remaining might stay the same. That then still requires you to redo your cube.

 

00;45;28;16 - 00;45;44;20

Speaker 1

I love the Rubik's Cube. I think that's a really great way of thinking of it. Very visual. Right? And it's maybe it's even, I don't know, a couple of years ago, a couple Christmases ago, I'd given my brother-in-law, like, one of these, these Rubik's cubes where it's like a heat sensitive one if you don't touch it, like the colors go away.

 

00;45;44;20 - 00;46;01;21

Speaker 1

So I almost feel like maybe there's a little of that dynamic going on here. So it's like a, you know, you have to hold it long enough to figure it out. And we don't know what the provisions are going to be. So, you know, Tony, I'm going to go to you. And just again thinking in that Rubik's Cube concept, you know, how do some of these pieces fit together for you?

 

00;46;01;23 - 00;46;04;09

Speaker 1

Yeah. Like just in light of what Dave was just saying.

 

00;46;04;12 - 00;46;30;17

Speaker 2

It's it makes it a tough year to do what we do because I've always said that taxpayers, more than anything, more than tax cuts, more than tax, you know, increases on the people that they want to see pay higher taxes, more than anything specific. You just want certainty, right? We just want certainty so that they can plan for the future.

 

00;46;30;24 - 00;47;03;24

Speaker 2

And we all knew that this time was coming, because as we talked about at the outset, the TCJA was just inherently temporary. I think maybe the more frustrating thing that’s not specific to 2025 is that our tax law has largely been temporary, even if it's not by design the way the TCJA was, because the trend has been to pass legislation through budget reconciliation with one party operating with impunity

 

00;47;03;24 - 00;47;28;29

Speaker 2

and so that's all well and good. But what happens when the pendulum swings the other direction, which we've now seen three times since 2016, right? We had Republicans in 2016. All Democrats in 2020. We’re back all Republicans in 2024. And so it makes for a very volatile, tax landscape. But as you can see, and so you can only imagine what would have happened or what would be happening

 

00;47;28;29 - 00;48;02;04

Speaker 2

now if the broader parts of the Build Back Better agenda had been passed by the Democrats in 2020. All of that would be getting, you know, deconstructed, right now with the Republicans in control. And so it just makes for a very troubling tax landscape when we try to advise our clients, and we're getting to see all of that in its purest form year over the next 10 months, because people want answers and those answers don't exist.

 

00;48;02;06 - 00;48;24;00

Speaker 2

And so the only thing we can do is, you know, something that we inherently do in our industry, but that I think a lot of non-tax people, as I mentioned before, are going to be doing over the next 10 months is follow tax policy and just kind of see how this all evolves and where it's going. And reading the articles in the paper

 

00;48;24;00 - 00;48;41;05

Speaker 2

so I just think  it's a great time for people who maybe normally take a pass on legislation and just say, you know, just tell me the laws where they're finally passed and I'll figure them out then to maybe get more involved on the front end, because, you know, we don't have the certainty we crave

 

00;48;41;05 - 00;49;15;26

Speaker 2

but we can at least follow all these so that we know how things are evolving and be as nimble as humanly possible. As we look to the future and, you know, we have to also consider, that there could be more in tax legislation than obviously just TCJA 2.0. I mean, David already mentioned possible fluctuations in the corporate rate, but don't forget the three big campaign promises by President Trump, which were: tax-free Social Security, tax-free tips and tax-free overtime.

 

00;49;15;29 - 00;49;40;22

Speaker 2

So that's something we have to keep an eye on as well, because you can only imagine, the possibilities that would open up, you know, and of course, as we saw in 2017, when you have a situation, as Dave mentioned, where the majorities are so thin it creates a lot of leverage for people in both the House and the Senate,

 

00;49;40;22 - 00;50;05;29

Speaker 2

I mean, we saw the leverage that senators Sinema and Manchin were able to wield back in 2020. But you can see priorities that maybe none of us fully anticipated getting pulled into a bill and suddenly becoming law that opens up, you know, new planning opportunities that we never even saw coming. And just yesterday, an area of the world that I live in, qualified small business stock under Section 1202.

 

00;50;06;00 - 00;50;33;25

Speaker 2

I mean, this is unbelievably unique and powerful incentive where non-corporate shareholders who sell qualified small business stock they've held for more than five years, can exclude up to a 100% of the gain from their federal taxable income. There's a bill in the House right now that would greatly expand 1202, not just as C corporations, but S corporations, allow favorable treatment for convertible debt and the like.

 

00;50;33;25 - 00;50;57;03

Speaker 2

And it's like, yeah, that's a small little thing that could get pulled in, right? To a broader bill. And suddenly we're thinking about TCJA 2.0, and there's a new incentive that just kind of gets buried in there that, you know, we you know, we wake up one day, go, oh, this, I probably should have been paying attention to that all along because that's something I would be thinking about in order to be …

 

00;50;57;06 - 00;51;20;17

Speaker 2

So I just take that as frustrating as it can be sometimes, to follow legislation and, you know, the ins and outs that happen every day and all of the horse trading, I think that over the next 10 months to be incumbent upon not just tax professionals, but tax payers, to really keep track of all this and see where it's all going to evolve and end up.

 

00;51;20;19 - 00;51;38;15

Speaker 1

I completely agree. Well said. And that's another dynamic. And you talk about the Rubik's Cube on choice of entity, right? 1202 qualified small business stock. I mean that is a big component that's available to you. And again, but maybe then that role even changes again and it shifts even further if we can if we can go beyond just C Corps.

 

00;51;38;15 - 00;51;39;15

Speaker 1

Right?

 

00;51;39;17 - 00;52;06;14

Speaker 2

Yeah. I mean, the idea of expanding 1202 to S corporations, that would be an absolute sea change in our industry and would again, you mentioned the Rubik's Cube, would absolutely change the mash on choice of entity because as David mentioned, C Corps were the entity choice of last resort from 1986 to 2017. And that's obviously changed a bit with the 21% corporate rate.

 

00;52;06;17 - 00;52;29;16

Speaker 2

What has been strictly the domain of C Corps has also been this 1202 exclusion. But you open that up to S corporations and it's just once again, all the math would move dramatically. And so when I'm talking about keeping an eye on legislation as I said, for choice and entity considerations, it's not just the countdown of the expiring provisions.

 

00;52;29;16 - 00;52;53;24

Speaker 2

What happens to the individual rate? What happens to the 199 cap A? What else might end up in a bill that changes that choice of entity math? And so yeah, it's frustrating as it can be to pour through hundreds, if not thousands of pages of proposed legislation as it evolves. It's something we had to do back in 2017 and we need to be doing over the next 10 months.

 

00;52;53;26 - 00;53;01;29

Speaker 1

I think we've got some late Friday night bill reading things on our horizon here, Tony, if I was going to put some money on here.

 

00;53;02;01 - 00;53;09;17

Speaker 2

Yeah. Don't remind me. I mean, that, and that was a long march back then, in December of 2017, just keeping track of,

 

00;53;09;17 - 00;53;12;05

Speaker 2

everything as it just kind of evolved.

 

00;53;13;06 - 00;53;33;14

Speaker 1

All right, Dave, let's boil this down to kind of the essential element here that you leave people with, like, what do we do? We talk about uncertainty. We talk about Rubik's Cubes. You know, we've got the sausage making process and then difficulties, I don't know, like pull it together for us here in terms of what you're thinking and how somebody should be approaching things right now.

 

00;53;33;16 - 00;53;38;02

Speaker 3

Be patient. Just be patient.

 

00;53;38;02 - 00;54;08;14

Speaker 3

Hopefully our elected officials will be able to get their act together sooner rather than later. That might take a little bit of faith that they will eventually do the right thing, but there are lots of balls in the air and we're still not sure which ones are going to land. We have greater odds on some than on others, but just be patient.

 

00;54;08;16 - 00;54;45;27

Speaker 3

Now. Sometimes the business realities of life do not allow for such a thing, and that then lends to the idea of, well, we pretty much know what 25 will be. Okay, maybe there might be things that are retroactive, such as bonus depreciation, such as 163 J for interest limitation, such as R&D. Those retroactivity possibilities are in the taxpayer favorable camp.

 

00;54;45;29 - 00;55;26;01

Speaker 3

It is highly unlikely that if anything were to be viewed as taxpayer unfavorable, that those would be retroactive to 1/1/25. So basically 25 is locked in stone, but can only get better, and 26 is still a little bit of a wild card, but still predictable. And that's how I would advise any individual taxpayer. Between now and when we get clarity coming out of Washington.

 

00;55;26;03 - 00;55;39;17

Speaker 1

It's very well said, Dave, I think. Yeah. Patience is it's hard. Right? Especially when you, you know, you see all these things coming along and changing and whatnot. But I like that. Tony, final thoughts on your end.

 

00;55;39;17 - 00;56;01;00

Speaker 2

And Dave summed it up perfectly. Everyone wants, you know, someone to have the crystal ball and tell what's going to happen. But anyone that can tell you they can predict how this is all going to end, is lying at this point. And so it's going to play out in real time. I think two things that Dave said are the big takeaways here.

 

00;56;01;01 - 00;56;30;20

Speaker 2

The one he just finished with, obviously, patience, to the extent you can have it is going to be an absolute virtue. But don't forget, you know, as you mentioned earlier as well, tax tail shouldn't be wagging the dog. And so, you know, make your business decisions based on what's best for your business. And you know, like I mentioned before, just keep an eye on the tax policy discussion so that you can be as nimble and flexible as possible given the uncertainty that we live in.

 

00;56;32;08 - 00;56;55;00

Speaker 1

And that's a wrap for our first episode of Elements of Private Tax, where private tax gets practical one element at a time. Remember, in the game of tax planning this year, patience and staying agile while perhaps not letting the tax dog wag the tail or something like that are your best defense. We’ll be back in your feed again soon, so be sure to subscribe today so you don't miss out.

 

00;56;55;03 - 00;57;06;14

Speaker 1

In the meantime, you can learn more and read more about EY Private Tax and the topics discussed in our episode today at ey.com. Until next time, I'm Damien Martin and thank you for listening.

This episode was recorded on February 13, 2025, and is for informational and educational purposes only. It’s not tax, legal, or financial advice. Always consult with your own advisor.