SLIDE 8 11/28/2017 8
HIGHLIGHTS OF TAX BILLS COMPARED
Business
Proposal Current Tax Law House Bill (Passed 11/16/2017) Senate Bill (Updated 11/16/2017)
Research & development credit Tax credit available to businesses that develop new or improved products
Explicitly retained(1) Explicitly retained*(2) *Repealed if on-budget federal revenue exceeds $27.487 trillion by an amount ≤ $900 trillion for the period 10/1/2017 through 9/30/2026
(1)For tax periods beginning after 12/31/2022, certain research & experimentation expenses, including software development costs,
would be required to be capitalized & amortized over a five-year period. For foreign research projects, this amortization period Increases to 15 years
(2)For tax periods beginning after 12/31/2025, certain research & experimentation expenditures, including software development
costs but excluding land acquisition & improvement costs & mine (including oil & gas) exploration costs, would be required to be capitalized & amortized over a five-year period. For foreign research projects, this amortization period increases to 15 years. Upon retirement, abandonment or disposition of property, any remaining basis would continue to be amortized over remaining amortization period. In addition, an additional reporting requirement & penalty for failure to file is added for tax periods beginning after 12/31/2024*
HIGHLIGHTS OF TAX BILLS COMPARED
Business
Proposal Current Tax Law House Bill (Passed 11/16/2017) Senate Bill (Updated 11/16/2017)
Untaxed accumulated foreign earnings Not addressed 14 percent rate for cash/cash equivalents, 7 percent otherwise, payable
10 percent for cash/cash equivalents, 5 percent
eight years Future foreign earnings Worldwide income tax based on residence & source Territorial system with base erosion provisions(1) Territorial system with base erosion provisions(1)(2)
(1)100 percent of foreign-sourced portion of dividends paid by foreign corporation to U.S. corporate shareholder owning
10 percent or more of foreign corporation’s stock exempt from U.S. taxation. No foreign tax credit or deduction allowed for any foreign taxes paid or accrued with respect to any exempt dividend
(2)Provides an election to preserve NOLs & coordinate NOL, overall foreign loss & foreign tax credit carryforward rules
upon transition
