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In this Issue: October 2019

This month's issue focuses on a variety of current issues in the taxation realm. Several different topics are covered, but what nearly all have in common is that they have been impacted by the Tax Cuts and Jobs Act of 2017. Regardless of its merits in terms of reform, its provisions have had a wide impact across the tax code, likely affecting every taxpayer in one way or another.

Our cover story is about the long-running debate over the deductibility of executive compensation, which has generally revolved around the definition of “reasonable” compensation. The TCJA took a big step in removing tax maneuvering in this area, but various exceptions mean that the goal of clarity and simplicity will remain out of reach.

The rapid growth in home sharing platforms has allowed many individuals to make extra income by renting out their home. The tax treatment of such income rests on difficult questions of classification. While the TCJA did not address home sharing activities directly, the law's qualified business deduction will impact the after-tax returns for home sharers.

The TCJA has also affected many of the incentives throughout the tax code. Two articles this month look at the law's impact on the tax treatment of research and development costs. Another article looks at the TCJA's impact on real estate professionals, who receive special treatment with regard to the qualified business income deduction. Finally, our State & Local Taxation column provides an update on how several states, including New York, have responded to the federal cap on the deduction for state and local taxes: so far, their efforts to preserve deductibility for their citizens have been met by resistance from the IRS and Treasury Department.

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