The enactment of the Tax Cuts and Jobs Act (TCJA) left little untouched in the world of private equity, and it will be some time before its effects are fully known. In this issue of the Private Equity Report, we take a close look at the topics that should be at the top of firm agendas.
Key Aspects of Partnership Tax Reform: The Good, the (Not So) Bad and the Ugly
The TCJA’s hefty changes to taxation involving partnerships are a natural preoccupation of the private equity industry and there is plenty over which to ruminate, including the resolution of the carried interest issue, the introduction of the Qualified Business Interest deduction and the new withholding regime on the sale of partnership interest by non-US partners.
Corporate Tax Reform
The permanent reduction of the corporate tax rate and bonus depreciation means more capital for investment, but it also affects M&A valuations, the value of tax assets and optimal portfolio capital structure—all of which require private equity firms to rethink their models and strategies.
Tax Reform and the Insurance Industry
The insurance industry knew from the beginning of last year’s successful tax reform efforts that it was likely to be giving up some of its traditional advantages. While this expectation turned out to be correct, most insurance companies are viewing the new law as a net plus—but with plenty of specifics affecting different firms differently.
GILTI by Association: Tax Reform in the International Arena
The TCJA brings fundamental changes to the United States’ approach to cross-border taxation. The Controlled Foreign Corporation regime is expanded, there is a new base erosion tax with which to contend, and a new treatment of foreign earnings that will significantly affect the flow of capital within corporations with international holdings.
We hope you find these articles to be useful resources for navigating this new tax landscape.