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Tax Planning: Corporate Executives

| November 07, 2019
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Given the complexity of changes to the tax code in the United States, there is much to consider in determining the impact tax legislation will have on the personal finances of corporate executives.

Passed in late 2017, tax-reform legislation made sweeping changes to the tax code in the United States, including changes to individual and corporate income tax rates. Known as the Tax Cuts and Jobs Act, the legislation first took effect in 2018, with many of its provisions set to expire on Jan. 1, 2026. The law includes tax-rate cuts for individuals, corporations and pass-through businesses, and eliminates many individual and business deductions. It increases exemptions for gift and estate taxes; the generation-skipping transfer (GST), which addresses wealth transfer; and the Alternative Minimum Tax (AMT), a supplemental tax affecting high-income earners. It also makes numerous changes affecting multinational businesses. With regard to tax laws affecting corporate executives or certain other employees, the legislation could create new planning opportunities or enhance previously existing ones, such as stock option and restricted stock grants. Also, the carried interest provision discussed below increased the holding period required to obtain long-term capital gain treatment.

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