The Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2023-09 (the “Update”) to enhance the transparency and decision usefulness of income tax disclosures.  The amendments in this Update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.  This Update also includes certain other amendments to improve the effectiveness of income tax disclosures.

Effective Date

For public business entities, the Update is effective for annual periods beginning after December 15, 2024.  For all others, the Update is effective for annual periods beginning after December 15, 2025.  Early adoption is permitted, and the Update shall be applied on a prospective basis.  Retrospective application is permitted.

Rate Reconciliation

Public business entities must disclose a tabular reconciliation using both percentages and amounts, broken out into specific categories with certain reconciling items at or above 5% of the expected tax further broken out by nature and/or jurisdiction.

All other entities must provide qualitatively disclosure of the nature and effect of significant reconciling items by specific categories and individual jurisdictions.

Income Taxes Paid

Both public business entities and all other entities must disclose income taxes paid (net of refunds received), broken out between federal (national), state/local and foreign. Disclose the income taxes paid (net of refunds received) to an individual jurisdiction when 5% or more of the total income taxes paid (net of refunds received).

Other Disaggregated Disclosures

Both public business entities and all other entities must provide Income (or loss) from continuing operations before income taxes, broken out between domestic and foreign, and Income tax expense (or benefit) from continuing operations, broken out between federal (national), state/local and foreign.

Removed Disclosures

The Update removes disclosure requirements for all entities related to: reasonably possible significant changes in the total amount of unrecognized tax benefits within 12 months of the reporting date; and the cumulative amount of each type of temporary difference for which a deferred tax liability has not been recognized (due to the exception to recognizing deferred taxes related to subsidiaries and corporate joint ventures).

Detail of the Update can be found in the attached ASU 2023-09.

ASU 2023-09

The U.S. Supreme Court has granted certiorari for the case of Moore v. United States, in which the petitioner seeks to challenge the constitutionality of the Section 965 transition tax, commonly referred to as the "Toll Tax." The petitioner argues that the Toll Tax, enacted as part of the Tax Cuts and Jobs Act of 2017, violates the 16th Amendment by being a direct tax on unrealized income. Despite previous rejections of their case in lower courts, the Supreme Court's decision to hear it has raised significant questions about the potential impact on tax law.

The Section 965 transition tax required U.S. shareholders to pay a one-time tax on certain untaxed foreign earnings of specified foreign corporations, with the option to pay it in eight yearly installments. If the Supreme Court rules in favor of the petitioner and invalidates this tax, taxpayers might be eligible for refunds, but only if they filed protective refund claims before their applicable refund statute of limitations expired.

For many taxpayers who paid the Section 965 tax in full, their statute of limitations may have already closed, making it administratively impossible to seek refunds. However, taxpayers who elected to pay over eight years, filed late returns, or have open years due to audits may want to consider protective refund claims to keep their statute of limitations open in case the Supreme Court's ruling favors the plaintiffs. Despite lower courts generally upholding the tax's constitutionality, the potential ramifications of a Supreme Court decision in the opposite direction make this a noteworthy issue for taxpayers with open statute of limitations.

Affected taxpayers should consult with their tax advisors regarding the pros and cons and understand the legal ramifications before making protective refund claims.

2017년 12월에 제정된 The Tax Cuts and Jobs Act (TCJA)는 미국의 세제 시스템을 크게 수정했다. 주요 변화로는 세율 인하, 표준 공제 확대, 평생 증여세 제외 강화 등이 있다. 이와 동시에 TCJA는 비즈니스 접대 공제 및 기타 인기 항목별 공제와 같은 몇 가지 세제 혜택을 없앴다.

개인세 및 사업세와 관련된 거의 24개의 TCJA 조항은 입법적으로 연장되지 않는 한 2025년 12월 31일 이후에 소멸된다. 다음은 만료되는 주요 조항과 그 잠재적인 의미에 대한 개요를 제공한다:

보너스 감가상각

2018년부터 2022년까지 적격 자산에 대해 100% 보너스 감가상각을 청구할 수 있다. TCJA는 이 조항을 단계적으로 폐지하여 2023년 80%, 2024년 60%, 2025년 40%, 2026년 20%, 이후 0%를 허용한다. 그러나 Section 179에 따라 가속 감가상각을 활용할 수 있다. 2027년 종료 전에 보너스 감가상각을 최대한 활용하는 것이 좋다.

GILTI 공제

TCJA는 저세율 해외 지역에서 무형자산에서 발생한 소득의 세제 이점을 최소화하기 위해 GILTI 규정을 도입했다. 2018년부터 2025년까지, 기업은 GILTI의 50%를 공제할 수 있어서 실질 세율이 10.5%로 낮아졌다. 그러나 2026년에는 이 공제가 37.5%로 감소하여 실질 세율이 13.125%로 높아진다.

상속세 평생 면제

TCJA에 따라 평생 증여 면제는 개인당 약 600만 달러에서 1,200만 달러로 두 배 증가했다. 재산 이전을 위한 유리한 조건이며, 2025년까지 1200만 달러를 최대한 활용한 개인들은 한도가 이전 금액으로 되돌아갈 때 어떠한 패널티도 부과받지 않을 것이다.  이러한 점을 감안할 때, 2025년 이전의 자산 처분은 상당한 재산을 가진 사람들에게 중요하다.

QBI 공제

TCJA는  C-Corps, S-Corps 및 Partnerships와 같은 기업으로부터 사업소득의 최대 20%를 공제받을 수 있도록 허용했지만, 이 공제는 2025년 이후에 단계적으로 폐지될 예정이어서 기업들이 C-Corporation 세금 상태를 선호하게 될 가능성이 있다.

주세 및 지방세 공제

이전에는 개인이 주세 및 지방세에 대해 무제한 항목별 공제를 청구할 수 있었다. TCJA는 이를 10,000달러로 제한했다. 2025년 이후, 한도가 해제되어 항목별 SALT 공제가 완전히 복원된다. 이 공제는 여전히 논란의 여지가 있는 문제로 남아 있으며, 2025년 이전에 변화가 나타날 수 있다.

Moving 비용

TCJA는 환불된 Moving 비용을 과세 대상으로 여기고, 미국 군인을 제외한 환불되지 않은 이동 경비에 대한 공제를 무효화했다. 2025년 이후에는 환불된 비용은 비과세가 되고, 환불되지 않은 비용은 공제 가능해질 것이다.

개별세율

TCJA는 최고 세율이 37%인 과세 범위를 이전 세율에서 변경했다. 추가 입법 없이, 이들은 2025년 이후 TCJA 이전 세율로 되돌아갈 것이며, 최고 세율은 39.6%이다. 양도 소득세율은 영향을 받지 않는다.

법인세율

TCJA는 법인세율을 35%에서 21%로 인하했다. 영구적인 전환이라는 프레임을 가지고 있지만, 재정 수요를 해결하기 위한 향후 조정 가능성에 대한 논의가 계속되고 있다.
전반적으로, 이러한 변화는 미래 지향적인 조세 계획의 중요성을 강조한다.

The Tax Cuts and Jobs Act (TCJA), enacted in December 2017, significantly modified the U.S. tax system. Major shifts included tax rate reductions, expanded standard deductions, and an enhanced lifetime gift tax exclusion. Simultaneously, the TCJA eliminated several tax breaks, such as business entertainment deductions and other popular itemized deductions.

Nearly two dozen TCJA provisions related to personal and business taxes will lapse after December 31, 2025, unless they are legislatively extended. The following provides an overview of key expiring provisions and their potential implications:

Bonus Depreciation

Businesses could claim 100% bonus depreciation on eligible property from 2018 to 2022. The TCJA phases out this provision, allowing 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, and zero thereafter. However, businesses can still utilize accelerated depreciation under Section 179. Taking full advantage of bonus depreciation before its 2027 termination is advisable.

GILTI Deduction

The TCJA introduced the GILTI regulations to minimize the tax advantages of deriving income from intangible assets in low-tax overseas regions. Between 2018 and 2025, companies could deduct 50% of GILTI, resulting in a 10.5% effective tax rate.  In 2026, this deduction drops to 37.5%, leading to a 13.125% effective rate.

Estate Tax Lifetime Exemption

The lifetime gift exemption doubled from about $6 million to $12 million per individual under the TCJA. Beneficial for wealth transfer, individuals who maximized the $12 million by 2025 will face no penalties when the limit reverts to its previous amount. Given this, asset disposition before 2025 is crucial for those with substantial estates.

QBI Deduction

The TCJA allowed a deduction of up to 20% of business income from entities like Schedule C businesses, S-Corps, and Partnerships. However, this deduction is scheduled to be phased out post-2025, potentially prompting businesses to prefer C-Corporation tax status.

State and Local Tax Deduction

Previously, individuals could claim an unlimited itemized deduction for state and local taxes. The TCJA capped this at $10,000. Post-2025, the cap will lift, reinstating full SALT deductions for itemizers. This deduction remains a contentious issue, and changes might emerge before 2025.  In the meantime, taxpayers with pass-through entity interest should consider utilizing pass-through entity tax election.

Moving Expense

The TCJA deemed reimbursed moving costs taxable and negated the deduction for non-reimbursed moving expenses, excluding U.S. military personnel. Post-2025, reimbursed expenses will become non-taxable, and non-reimbursed expenses will be deductible.

Individual Tax Rate

The TCJA changed tax brackets, highest rate being 37%, from previous rates. Without further legislation, these will revert to their pre-TCJA rates post-2025, highest rate being 39.6%. Capital gains tax rates remain unaffected.

Corporate Tax Rate

The TCJA slashed the corporate tax rate from 35% to 21%. Though framed as a permanent shift, there are ongoing discussions about possible future adjustments to address fiscal needs.

Overall, these changes underscore the importance of forward-thinking tax planning.