U.S. TAX REFORM – WHAT IT MEANS FOR THE GAMING AND HOSPITALITY INDUSTRY

Against all odds, Congress, on a straight party-line vote, enacted the most significant tax reform the U.S. has witnessed in more than 30 years. The tax reform legislation, known as the “Tax Cuts and Jobs Act,” significantly alters the tax law landscape for businesses. This article offers a high-level overview of some of the tax law changes that may specifically impact the gaming and hospitality industry. Corporate Tax Rates Slashed to 21% A hallmark of the Tax Cuts and Jobs Act is adoption of a flat 21% corporate income tax rate. Under prior law, the U.S. had one of the highest corporate tax rates of the industrialized world, topping out at 35%. The new 21% corporate tax rate is effective for tax years beginning after December 31, 2017. Immediate Expensing of Capital Investments The Tax Cuts and Jobs Act expands bonus depreciation to permit 100% expensing of the costs of qualified property. “Qualified property” is generally defined to consist of tangible personal property with a recovery period of 20 years or less. Personal property, such as machinery and equipment, may be eligible for 100% expensing. The provision, however, is only temporary. The 100% expensing is available until 2022 and is then followed by a 5-year phase-out period. Repeal of the Corporate AMT The much-maligned corporate federal alternative minimum tax was repealed, effective for tax years beginning after December 31,...

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