Part 5: 2017 Tax Cuts and Jobs Act - What You Need to Know

Today we wrap-up our series highlighting some of the provisions in the recent Tax Cuts and Jobs Act.  All provisions are effective 1/1/2018 unless otherwise stated.  As always, if you should have any questions, please feel free to reach out to our office.

Additional Changes for Businesses


Temporary 100% Expensing for Certain Business Assets
New depreciation schedule for “qualified property” depending on when it is first placed in service (“qualified property” means property that has a recovery period of 20 years or less; computer software, etc.)

Placed in service after





















The current rate is 50% which would have expired 12/31/2019 under current law. For certain other property including property that has a recovery period of at least 10 years, is transportation property or certain aircraft, the rates are the same, but the date that the property must be placed in service before, is one year later than in the chart above. The table above also applies to plants bearing fruits and nuts for plants planted or grafted before/after those dates.


Employer Deduction for Fringe Benefits
Eliminates deduction for entertainment, amusement or recreation activities. No deduction is allowed for qualified transportation fringe benefits under Code sec. 132(f) (subsidized bus pass, parking, bicycle commuting reimbursement). No deduction will be allowed for entertainment, amusement or recreation activities, membership dues for clubs organized for business, pleasure, recreation or other social purpose, or a facility used in connection with any of these activities. Taxpayers may still generally deduct 50% of the food and beverage expenses associated with operating their trade or business (e.g., meals consumed by employees on work travel). For amounts incurred and paid after 12/31/2017 and until 12/31/2025, expands this 50 percent limitation to expenses of the employer associated with providing food and beverages to employees through an eating facility that meets requirements for de minimis fringes and for the convenience of the employer. Such amounts incurred and paid after 12/31/2025 are not deductible.
Effective: 1/1/2017 except for meals provided at convenience of employer becomes effective 1/1/2026.


Denial of Deduction for Cash, Gift Cards and Other Non-tangible Personal Property as Employee Achievement Awards
No deduction is allowed for the cost of an employee achievement award if it is cash, gift cards, vacations, meals, tickets to sporting events, etc.


Tax Reporting for Life Settlement Transaction and Basis in Life Insurance Contracts
The purchaser of a life insurance contract or any interest in a life insurance contract in a reportable policy sale must disclose certain information to the IRS, the insurance carrier and the seller for that taxable year. A reportable policy sale means “the acquisition of an interest in a life insurance contract, directly or indirectly, if the acquirer has no substantial family, business, or financial relationship with the insured….”

When death benefits are paid, the insurance company must report information about the payment to the IRS and to the payee, including each recipient of a payment, the gross amount and the company’s estimate of the buyer’s basis in the contract. This applies to any life insurance contract that has been transferred in a reportable policy sale.

To determine the basis in a life insurance or annuity contract, no adjustment is made for mortality, expense or other reasonable charges under the contract (“cost of insurance”). This reverses the IRS in Rev. Rul. 2009-13 that on the sale of a cash value contract, the owner’s basis is reduced by the cost of insurance. The transfer for value rule will apply in the case of a reportable policy sale so that some portion of the death benefit will ultimately be included in income.

The transfer for value rule will apply effective for reportable sales after 12/31/2017.
The basis rules apply for life insurance and annuity contracts transactions entered into after August 25, 2009.