Page 23 - Arkansas Trucking Report Volume 22 Issue 6

reversion of those S corps and partner-
ships and limited liability companies “NOW, 30 YEARS LATER, IT APPEARS THAT THE
back to C corps, so I guess history has a
way of repeating itself,” he said. TAX CODE’S FLIPPING BACK TO FAVORING A C
The fluid nature of the tax situa- CORPORATION, AND SO THERE MAY BE A REVERSION
tion means trucking companies may OF THOSE S CORPS AND PARTNERSHIPS AND LIMITED
want to wait before making that deci-
sion, said Hogan. His firm serves more LIABILITY COMPANIES BACK TO C CORPS, SO I GUESS
than 120 carriers with revenues from HISTORY HAS A WAY OF REPEATING ITSELF.”
$5 million up to $200 million.
“I would hate to have a truck- —RICHARD BELL, CPA, PRESIDENT AND CEO OF THE
ing company that was a C corporation ACCOUNTING FIRM BELL AND COMPANY
wanting to switch to S and file all the
paperwork by year end,” he said. “Then
we learn something new in 2018, and
then you can’t get out of it. You can’t spouse, the children that are involved. ently challenging – more so for trucking
undo what you did. That would be trag- There are all the employees of the com- companies than others because they
ic. …I think we will have some answers panies where the owner has died. Death must obey rules at the federal level and
before the end of the calendar year, but has a great impact on a lot of different in up to 50 states. Hogan said certain
today I’m asking to hold on big deci- people and a lot of different job roles. If states are more troublesome than oth-
sions like that.” it’s not properly planned, it can be just a ers. For example, carriers should always
dang train wreck.” file a return in New Jersey even if they
ESTATE TAX CHANGES only run a few miles in that state. He’s
Of particular interest to large REFORMED, BUT NOT ANY had clients whose trucks have been
trucking company owners would be SIMPLER impounded because they didn’t file a
the way the bills deal with the estate Hogan questioned if the changes return there. Pennsylvania can review a
tax, which is currently 40 percent. The being considered would actually make trucking company’s complete financial
House plan would double the exemption the tax code simpler. He said that some history.
from the current $5.5 million to $11 Americans will end up paying higher “If they find out you’re not filing,
million in 2018 and about $22 million taxes if the proposals pass because of they’ll go back 20 years and make you
for couples, scrapping it completely in the loss of itemized deductions. In one file returns,” he said. “It’s a nightmare
2024. The Senate plan also doubles the scenario, a taxpayer earning $400,000 trying to file returns for the last 20
exemption but doesn’t end the tax. annually in W-2 wages with certain years. Who keeps records that long,
There were 11,917 estate tax filings itemized deductions would pay $4,100 right?”
in 2015, but because of the exemp- more in taxes. As for his clients, it’s hard The tax package is a fluid situation,
tions only 4,918 filings resulted in a tax to tell what changes they would face. and a lot can change. Trucking com-
liability. That year, it netted the federal “The big thing you hear is that panies will have no choice but to pay
government nearly $17.1 billion, accord- we want to simplify the tax code, but attention and respond.
ing to the IRS. based on what I’m looking at, this is “I think it’s going to take some
Hogan said that it’s affected few of not a simplification of the tax code,” careful planning, some careful year-end
his clients in his 15 years with the firm. he said. “A lot of aspects make things planning at the end of this year to know
Bell said some of his have had to pay it. more complicated. I was sitting through whether we should accelerate income
It can be a complicated process. this explanation of how they want to into ’17 or defer income into ’18,”
Trucking owners should be prepared to tax flow-through passive income, and Hogan said. “We just don’t have all the
pass on their wealth to the next genera- I was thinking they were out of their answers yet. All we have is a bunch of
tion, Bell said. mind. If you read in the news, they guesses, so I would just advise them to
“There’s a lot of people, or a lot of push a lot about how they’re decreasing get with their advisor and map out what
moving parts that go into administrat- the tax brackets from seven to four, and their taxable income could look like for
ing an estate,” he said. “Accountants, that’s going to simplify. That has abso- 2018 and what makes sense here.”
we play our role. There are the roles that lutely nothing to do with simplification Editors note: At time of printing,
are played by tax attorneys. There are because the computer handles all that. both versions of the bill are in conference,
roles that are played by trust adminis- That doesn’t make anything easier. It’s with the bill expected to pass before
trators. You use the bank trust depart- all behind the scenes anyhow.” Christmas. ATR
ments. There’s maybe the surviving Complying with tax laws is inher-

ARKANSAS TRUCKING REPORT | Issue 6 2017 23