THE ABA WINS FOR LAWYERS ON TAX REFORM
THE ABA WINS FOR LAWYERS ON TAX REFORM
DAN TRAYNOR ABA Delegate
The American Bar Association( ABA) won hard-fought victories on key tax issues affecting the legal profession in the“ Tax Cuts and Jobs Act of 2017,” the comprehensive tax reform legislation recently signed into law by President Donald J. Trump.
While not all ABA recommendations were incorporated into the final legislation, these issues were favorable for lawyers and law firms:
Mandatory Accrual Accounting for Law Firms. Fortunately, ABA-opposed mandatory accrual accounting proposals were not included in the final bill. Had these proposals been included, they would have required many law firms to switch from cash to accrual accounting and pay taxes on“ phantom income” long before it is received from clients.
Tax Relief for Pass-Through Entities. Individual owners of pass-through entities— including law firms and other professional service businesses, up to certain income thresholds, will be allowed to deduct 20 percent of the“ qualified business income” they receive from the entity. The ABA worked to ensure law firms received the same benefits as other pass-through businesses.
Student Loan Interest Tax Deduction. The existing deduction is retained in the final legislation, as requested by the ABA in a letter to House and Senate leaders.
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ABA Mid-Year Meeting in Vancouver
Vancouver, British Columbia, hosted the mid-year meeting of the ABA on the first weekend in February. When the House of Delegates convened, a few items of interest to North Dakota lawyers were considered.
Resolution 105 – Lawyer Well-Being The ABA’ s Commission on Lawyer Assistance Programs documented a crisis of lawyer well-being. The research demonstrates alcohol use, substance use, and mental health disorders among law students and lawyers far exceed other professions and populations. Resolution 105 urges stakeholders to consider recommendations set out in the report The Path to Lawyer Well-Being: Practical Recommendations for Positive Change by the National Task Force on Lawyer Well- Being.
Uniform State Laws The ever-diligent National Conference of Commissioners on Uniform State Laws provided the ABA House with a number of revised drafts for approval.
• The Uniform Unclaimed Property Act was revised to embrace new types of unclaimed property, such as gift cards.( Resolution 112A)
• The Uniform Direct Trust Act was updated to allocate fiduciary responsibilities among multiple parties. The modern trend of trust administration is to divide the trustee’ s various duties among multiple specialists. The new uniform act provides clear default rules to ensure beneficiaries remain protected and each party is responsible for its own actions.( Resolution 112B)
• The Uniform Guardianship, Conservatorship, and Other Protective Arrangements Act was approved. The current outdated uniform law governing guardianships and conservatorships is updated by implementing policies and best practices recommended at the 2011 Third National Summit on Guardianship.( Resolution 112C)
• The Uniform Parentage Act( 2017) provides states with a legal framework for establishing parent-child relationships. The last revision occurred in 2002.( Resolution 112D)
• The Uniform Protected Series Act provides a comprehensive framework for the formation and operation of a protected series limited liability company.( Resolution 112E)
• The Uniform Regulation of Virtual Currency Businesses Act creates a statutory framework for regulating companies engaged in virtual-currency business activity. The Act seeks to remove the existing gray areas and provide clarity to both regulators and businesses, encourage innovation, and protect consumers who use virtual currencies.( Resolution 112F)
Resolution 115A – Tax Treatment of Alimony Payments The recently-passed“ Tax Cuts and Jobs Act of 2017” changes the tax treatment of alimony payments as of Dec. 31, 2018. After that date, payors can no longer deduct alimony payments, but the spouse receiving the money no longer has to pay taxes on it. The ABA Section on Family Law offers Resolution 115A, urging tax code provisions that allow the deduction of alimony payments.
ABA Day in Washington
ABA Day is a three-day conference that brings together leaders of the ABA and state and local bars from across the country to take the message of lawyers to Congress. ABA Day 2018 will take place April 10-12, 2018, in Washington, D. C.
Jackrabbit Bar Conference
SBAND is hosting the 2018 Jackrabbit Bar Conference in Medora, N. D., on May 31 to June 2. This regional bar meeting is a favorite of lawyers from smaller western states for its relaxed atmosphere and collegiality. Mark your calendars and watch for more information from SBAND via email or at www. sband. org.