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 .