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Federal Tax Reform Act Changes

Affecting Healthcare Organizations

The House of Representatives and Senate conferees
reached agreement on a single version of the Tax Cuts
and Jobs Act (“TCJA”) which was approved by both the
House and Senate on December 19, 2017. President
Trump signed the bill into law on December 22, 2017.
While much of the TCJA publicized material has
focused on Federal tax laws affecting individuals there
are numerous changes applicable to both taxable and
tax-exempt healthcare organizations. Summarized
below are several material changes which may affect
your healthcare organization.
Please note that these changes generally are effective
for years beginning after December 31, 2017 and may
FRIDAY, APRIL 13, 2018 be temporary or phased out over the next ten years. BY SCOTT J. MARIANI,
JD
TCJA highlights affecting Federal taxable healthcare
UNIVERSITY OF MIAMI organizations:
1. Lowers the Federal corporate income tax rate to a flat rate of 21%.
2. Repeals the Federal corporate alternative minimum tax.
3. Certain qualified business assets acquired and placed in service after September
27, 2017 may be fully expensed and increases the Internal Revenue Code Section
As Congress and the Trump administration consider §179 limitation to $1 million.
4. Disallows certain entertainment expense deductions but retains the 50% deduc-
various paths forward for U.S. health care reform, the tion for business related meals.
School of Business Administration, will host the seventh 5. Net operating losses incurred for years’ post December 31, 2017 will be limited
to 80% of a taxpayer’s taxable income in each year. Net operating losses incurred prior
in its series of premier health care conferences, to years beginning after December 31, 2017 remain unlimited. Generally, losses can
no longer be carried back.
The Business of Health Care: What’s Next? 6. Increases the gross receipts threshold for the availability of a taxpayer to elect the
cash method of accounting for certain corporations and partnerships.
Don’t miss this unique opportunity to hear from some TCJA highlights affecting Federal tax-exempt healthcare organizations:
1. Imposes a 21% excise tax payable by the employer on compensation paid in
of the nation’s top industry and policy leaders on the excess of $1 million to an applicable tax-exempt organization’s covered employees.
2. Amounts paid or incurred by employers relating to certain employee fringe ben-
implications of widespread changes to the U.S. health efits will be treated as unrelated business income. Employee fringe benefits include
(1) any qualified transportation fringe benefit (2) any parking facility used in connec-
care system on business and government. tion with qualified parking and (3) any on-premises athletic facility.
3. Activities which constitute an unrelated trade or business must now be reported
SPEAKERSINCLUDE separately on a Federal Form 990-T. Aggregating (or netting) a taxpayer’s unrelated
trade or business activities and corresponding income/losses are no longer permitted.
4. Net operating losses incurred in unrelated trade or business activities must gen-
Richard Pollack Halee Fischer-Wright, MD erally follow the rules for Federal taxable healthcare organizations as outlined above.
President and CEO President and CEO 5. Interest on bonds issued after December 31, 2017 to advance refund another
American Hospital Medical Group bond is no longer excluded from gross income.
Association Management Association
For more information, contact Scott J. Mariani, JD, Partner and
Marilyn Tavenner Drew Altman, MD Healthcare Practice Leader, WithumSmith+Brown, CPAs, at (973) 868-8124 or
President and CEO President and CEO smariani@withum.com or visit www.withum.com.
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10 February 2018 southfloridahospitalnews.com South Florida Hospital News