Infrastructure Investment Jobs Act and Build Back Better Act: What’s in these Bills and the Impact on You and Your Business

At a glance:

• The Infrastructure Investment Jobs Act passed by Congress on November 5, 2021 has been sent to President Biden to sign.
  • Learn about the incentives included and how they may benefit you and who will pay for the benefits.
  • Learn about the new crypto filing requirements that will impact everyone involved in investing in digital asset investments, the sale of and transfer of digital assets.
• On October 28, 2021, the proposed legislative text of the Build Back Better Act (the BBBA) reflecting the framework was announced by President Biden.
  • The debate continues on the Senate floor. While amendments to the current provisions are possible, higher-income taxpayers should be prepared for the likelihood that your taxes will increase.
  • While the provisions within the bill have yet to be finalized, taxpayers should prepare for an impact on:
    • Crypto investment and major changes to the Wash Sale Rules,
    • Research and Development – timing of deductions,
    • International tax changes impact every company involved in global businesses from exports to companies with foreign subsidiaries,
    • Individuals who are impacted by many of these same provisions, including estate and gift planning.

Next steps: Aprio’s Tax team is here to discuss these two bills passed and not-yet passed daily. Our team has put together a series of webinars to guide you through the details of the bill to help you plan accordingly and minimize tax costs.

The full story:

We are offering four separate webinars the week of November 16 that you can pick and choose which ones you would like to join. Here’s what each webinar will focus on:

Individual Update:

The updated proposal of the BBBA, if passed, will have major impacts on many individuals and pass-through business owners. On this webinar we will discuss the following enacted and proposed tax changes:

• The status of the recent proposal for the increase in individual income tax rates and capital gains tax rate targeting individuals with income of more than $400,000.
• The new proposed income tax surcharge of up to 8 percent on trust, estates and millionaire earners.
• The proposed expansion of the 3.8 percent net investment income tax for taxpayers who are passthrough entity owners earning more than $500,000.
• The most recent bill changes in the deductibility of the state and local income taxes for individuals. Followed by a discussion of how this may impact planning for pass-through entity owners considering utilizing the new state pass-through entity tax.
• The modifications to the child tax credit, residential energy credit and plug-in electric vehicle credit.
• The potential amendments to Section 1202 Qualified Small Business stock 100 percent and 75 percent gain exclusions for those earning more than $400,000 or trusts and estates.
• Separate from the BBBA, on November 3, 2021, the Internal Revenue Service (IRS) posted detailed reporting directions for carried interests, often referred to as promote, held through certain passthrough entities for tax returns filed after December 31, 2021.

Crypto – everything just changed:

Learn about the changes in both bills impacting everyone in Crypto, which includes most of the world today:

• New 1099 Filing requirement impacting the entire industry.
• New requirement for businesses to file IRS Form 8300 for suspicious activities within 15-days of receiving digital assets of any kind.
• Wash sale rules may immediately go into effect for digital assets, eliminating a huge current tax planning mechanism when experiencing a volatile crypto market.
• Applying short-selling rules to crypto transactions, currently not in place.

International Update:

Any company involved in international business needs to attend this session to see how companies who export to those who own subsidiaries around the world will be impacted:

Proposed modifications to current international tax rules

While additional international changes are expected, there are changes to Global Intangible Low Tax Income (GILTI), Foreign Tax Credits (FTCs), Foreign Derived Intangible Income (FDII) and Base Erosion and Anti-Abuse Tax (BEAT).

• The effective GILTI tax rate could increase to 15.02 percent (based on the corporate rate remaining 21 percent) and be computed on a country-by-country (CBC) basis.
• The FTC haircut on GILTI is reduced to 5 percent from 20 percent, and GILTI FTCs can now be carried forward.
• For exports of tangible and intangibles such as software and gaming companies, the FDII effective rate is increased to 15.8 percent from 13.125 percent. If you are profitable, this is important for you to see this change!

Technology and Manufacturing:

Venture Capitalists, private equity firms and companies who heavily invest in R&D will see several changes that will have positive and negative implications from the Infrastructure Investment and Jobs Act and the Build Back Better Act.

Learn about the impacts on you and your company including:

• Deductions for R&D expenses
• R&D Tax Credit
• Section 1202 impact for QSBS
• International provisions
• Carried interest and Profits Interest

The bottom line

While legislation for the Infrastructure Bill is set to be signed shortly by President Biden, the provisions for the BBBA are still being hashed out by the Senate. Both pieces of legislation will impact business owners and individuals. Our Tax team is continuously monitoring updates on legislation to help our clients stay ahead of the curve. To better prepare you, we will be hosting a series of webinars discussing the impacts of the Infrastructure Investment and Jobs Act and the Build Back Better Act. Click below to register for one or more of our webinars.