The passage of tax reform now appears to be almost a done deal. The formal vote still has to be taken this coming Tuesday, but the merged House and Senate plans look to have the 50 votes needed for passage ahead of the Christmas break. Numerous issues have to be considered under tax reform. Not all the results will be positive, and not all of them will be negative.

Savers and investors really will like numerous issues under tax reform. Some of the changes actually may be higher taxes than in prior years or under prior administrations. The reality is that some of the areas where the taxation toward investors are concerned might not have been jacked up higher by as much as feared. Sometimes “less attractive” is still quite attractive in the grand scheme of things.

Before we get into just how positive the investor view will be, it is important to understand that the merged tax reform markup released on Friday was over 1,000 pages long. It seems almost impossible to believe that 100% of this will go unchanged. Maybe it is changed at the last minute, but many changes and tweaks could be made after the fact if there are unintended consequences.

Again, not everyone will love all aspects of the tax reform as it stands. There are some winners, and some of us will end up paying more. And some of the verbiage is still confusing enough that we will not understand the actual ramifications until we actually see how they work.

The president is expected to sign this bill into law after the House and Senate vote next Tuesday. Here are nine things that look good for investors under the coming tax reform.

1. Corporate taxes will drop to 21% from the current 35%. America has had the highest corporate tax rate of the developed world, and while the initial target of 20% is not the rate settled on, it is still far better for companies and makes them far more competitive with international jurisdictions. This frees up more cash for dividends, stock buybacks, acquisitions and other pro-investor strategies.

2. The highest income tax bracket drops to 37% from the 39.6% rate. While that pertains to adjusted gross income rather than investments, the reality is that this lower rate is still a 2.6% drop that will be applicable for short-term (under one year) capital gains. If you like to buy major sell-offs and be opportunistic with market gyrations, your short-term gains likely will be taxed lower in 2018 than they have been in recent years.

3. The silly initial proposal of FIFO (first in, first out) sales rules to stocks and other investments seems to not apply for individual investors as had been previously proposed. This means that you won’t have to count the shares you first bought years ago in a sale if you wanted to count other share sales made more recently. This also can prevent forced long-term gains versus short-term gains and vice-versa, as well as the losses of course.

4) 529 Plans pertain to education rather than to investing, but most 529 plan funds get invested into stocks and bonds to grow tax-deferred or tax-free. Educational savings will be up to $10,000 yearly per student for educational expenses. This money is invested tax-free as long as it is used for educational purposes, but this gets expanded to cover K-12 tuition and expenses for private schools and homeschooling costs.24/7 Wall St.
20 Fresh Stock Buybacks Could Send $100 Billion Back to Shareholders

5) Some people do not view their home as an investment per se, but for many Americans the number one source of wealth accumulation comes from the long-term capital gains associated with their primary residence and real estate. Initial proposals called for changes to the $250,000 (or $500,000 for married/joint filers) exemption in capital gains from the sale of your primary residence for those who have owned and lived in that home for two of the past five years. There is no change, so capital gains won’t be changing there.

6) The Alternative Minimum Tax (AMT) limits are being raised for individuals. The AMT will still exist, but the exemption levels will rise up to $70,300 for individual tax filers and to $109,400 for joint tax filers. The AMT threshold increasing affected more people over time, but this at least means fewer taxpayers who rely on municipal income and other tax-advantaged items will fall into the AMT trap.

7) Immediately being able to write off the full cost of new equipment by businesses will allow for many aspects of capital spending to be treated as line-item expensing rather than being amortized over years. This can greatly reduce a tax burden in what would have otherwise been a high-income year. And that means more income for investors ahead, or less tax burden now, that can be used for buybacks, dividends and acquisitions.

8) Retirement plan contributions will continue to be deductible and will grow without being taxed until the approved withdrawals begin. Prior discussion had indicated that 401(k) and other qualified retirement plan contributions would be limited or have different bracket limits and thresholds.

9) Billions of dollars in cash can now be repatriated from overseas. The repatriation of currently deferred foreign profits at a rate of 15.5% applies to liquid assets (cash and investments) and 8.0% for illiquid assets. This is higher than in past repatriation compromises, but it still allows for corporations to bring back the more than $1 trillion held overseas without paying an additional 35% tax. This will help fund buybacks and dividends for investors.


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AT&T is giving $1,000 bonuses to 200,000 employees after tax bill

AT&T is paying bonuses of $1,000 to more than 200,000 U.S. employees.
AT&T's CEO said it was in response to tax reform.
The House of Representatives on Wednesday sent tax reform legislation to President Donald Trump, who is expected to sign it soon.Anita Balakrishnan | Ari Levy
Published 3 Hours Ago  Updated 16 Mins[AT&T to invest $1 billion following tax reform passage]
AT&T to invest $1 billion in capital spending following tax reform passage  2 Hours Ago | 03:21

AT&T was quick to respond to news of U.S. tax reform, announcing it would give some employees bonuses once the legislation is signed into law.

The telecom giant said in a press release Wednesday that it would give more than 200,000 of its U.S. workers who are union members a special bonus of $1,000. The company also increased its capital expenditures budget by $1 billion in the U.S.

"Congress, working closely with the President, took a monumental step to bring taxes paid by U.S. businesses in line with the rest of the industrialized world," CEO Randall Stephenson said in a statement. "This tax reform will drive economic growth and create good-paying jobs. In fact, we will increase our U.S. investment and pay a special bonus to our U.S. employees."

AT&T had previously said that it would invest $1 billion in the U.S. if "competitive" tax reform legislation was passed, and has said that the tax reform framework could increase demand for AT&T's services.

The House of Representatives on Wednesday sent tax reform legislation to President Donald Trump, who is expected to sign it soon. Trump lauded the bill, calling it "an extraordinary victory for American families, workers, and businesses."

The new tax law will drop the corporate tax rate to 21 percent from the current 35 percent and includes other measures that Republicans say will spur businesses to invest domestically. AT&T's effective tax rate was 32.7 percent in 2016, according to its annual report. As of the third quarter, AT&T had about $16.5 billion in capital expenditures in 2017.

In Wednesday's announcement, AT&T noted its track record of creating U.S. jobs. Earlier this year, thousands of AT&T workers, members of the Communications Workers of America union, went on strike over issues like job security and outsourcing. Many AT&T workers already expected to receive 10 percent raises and $1,000 lump-sum back wages as a result of an agreement announced last week.

AT&T told CNBC the bonuses announced on Wednesday are above and beyond any existing agreements, which means some workers would get two $1,000 allocations: One with a new contract, and one when the tax reform bill is signed.

AT&T's tax reform announcement comes a month after the Justice Department challenged AT&T's pending merger with Time Warner. Trump has said the deal is "not good for the country" because it might make prices increase.

On the other hand, AT&T stands to be a potential beneficiary of another recent move by the Trump administration: the repeal of net neutrality regulation. The new regulatory landscape will afford AT&T more flexibility to control the pricing and speed of content for its internet customers, although AT&T has said it will not make big changes to the way internet services are delivered.

Stephenson is a longtime Republican donor, contributing to candidates, political action committees and the party for at least the last two decades. In 2016, he donated to candidates including Speaker of the House Paul Ryan and Arizona Sen. John McCain. In June of this year, he donated to Trump, presumably for his re-election campaign, and sent almost $34,000 to the Republican National Committee, according to the Center for Responsive Politic

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The Pentagon plans to keep some US forces in Syria indefinitely, even after a war against the Islanic State extremist group formally ends, to take part in what it describes as ongoing counterrorrism operations. There are approximately 2,000 US troops in Syria, along with an unspecified number of contractor's supporting them. Last month the US military withdrew 400 marines from Syria. Offiials earlier this week disclosed the plans for an open-ended commitment known as a conditions based presence. That is he same approach the Trump administration is taking in Afghanistan. The United States will sustain a conditions based military presence in Syria to combat the threat of terrorist led uncertainty prevent the resurgence of ISIS and to stabilize liberated areas. US defense officials stressed there would be no large permanent bases in Syria of the kind the US maintains in places like Germany and South Korea. Instead troops will be assigned to smaller bases and outposts.