In this sixth installment of my multi-part series on the One Big Beautiful Bill Act (the “Act”), I discuss a provision of the Act that impacts the deductibility of corporate charitable gifts under Code Section 170(b)(2)(A).[1]
Background
The rules surrounding the deductibility of charitable contributions made by C corporations are straightforward. In general, corporations are allowed to deduct charitable contributions. The deduction, however, cannot exceed 10% of a corporation’s taxable income for the taxable year, computed without regard to the charitable contribution (the “Ceiling”). Contributions in excess of the Ceiling may be carried forward for up to five years. Code Section 170(b)(2).
The rules sound simple enough. Unfortunately, the Act increases the complexity of the subject matter.
In this fifth installment of my multi-part series on the One Big Beautiful Bill Act, Steve Nofziger and I discuss a provision of the Act that impacts certain business owners who are contemplating a sale of their shares, Code Section 1202.[1]
Background
Code Section 1202 has a rich history. It was originally enacted over three decades ago as part of the Revenue Reconciliation Act of 1993. It was one of many provisions of that legislation aimed at stimulating the investment in closely held businesses. Congress tinkered with Code Section 1202 over the following years, enhancing the benefits it offered small business owners. In 2009, as part of the American Recovery and Reinvestment Act of 2009, Congress temporarily increased the amount of gain exclusion offered under this provision. The next year, as part of the Small Business Jobs Act of 2010, Congress temporarily increased the gain exclusion in limited circumstances to 100%. Impetus for that amendment to Code Section 1202 (increasing the benefit to 100%) was recognition by lawmakers that many taxpayers that otherwise qualified for gain exclusion under Code Section 1202 were not able to take advantage of it due to other provisions of the Code (e.g., the individual alternative minimum tax). The 100% exclusion, however, enhanced the benefit so that taxpayers subjected to the alternative minimum tax would see some benefit from the application of Code Section 1202. Accordingly, as part of the Protecting Americans from Tax Hikes Act of 2015, Congress made the 100% exclusion permanent. Consequently, the selling shareholders of a closely held corporation and their tax advisers today need to evaluate the application of Code Section 1202.
The One Big Beautiful Bill Act (the “Act”), signed into law by President Trump on July 4, 2025, made several significant changes to the existing framework for the exclusion of capital gains from the sale of qualified small business stock (“QSBS”) under Code Section 1202.
In this fourth installment of my multi-part series on the One Big Beautiful Bill Act (the “Act”), Steve Nofziger and I discuss a provision of the Act that impacts pass-through business entities and their owners, Code Section 199A.[1]
Background
Code Section 199A, commonly referred to as the Qualified Business Income (“QBI”) deduction, was enacted during President Trump’s first term in office as part of the Tax Cuts and Jobs Act (“TCJA”). As you may recall, the TCJA changed the C corporation tax rate landscape that came with a top tax rate of 35% to a flat rate structure pegged at 21%. Meanwhile, pass-through entities (S corporations, partnerships and sole proprietorships), which are predominately owned by individuals, were left with a graduated tax rate structure that quickly rises to a rate of 37%.
To create more of an even playing field between pass-through entities and C corporations, the TCJA created a new deduction for pass-through entities with the enactment of Code Section 199A. This provision allows owners of certain pass-through entities a 20% deduction of “qualified business income” (“QBI”).
Like many provisions of the TCJA, Code Section 199A was scheduled to sunset at the end of 2025. The Act, signed into law by President Trump on July 4, 2025, made Code Section 199A a so-called permanent provision. It also made several changes to its deduction framework.
In this third installment of my multi-part series on the One Big Beautiful Bill Act (the “Act”), I discuss a provision of the Act that may not impact a large segment of the population, but which is interesting and worthy of coverage.
Section 70114 of the Act only impacts gamblers. It amends Code Section 165(d).
Background
Over the years, I authored numerous articles about the taxation of gambling. In 1987, I authored a lengthy law review article, The Evolution of the Phrase Trade or Business: Flint v. Stone Trace Company to Commissioner v. Groetzinger – An Analysis with Respect to the Full-Time Gambler and the Investor, 23 Gonzaga Law Review 513 (1987/1988). In that article, I examined, in part, whether a full-time gambler, for tax purposes, is in the trade or business of gambling. If the answer to that question is yes, two results follow (one result that is good and one result that is not so good): (1) the gambler is able to deduct under Section 162 of the Code all of the ordinary, necessary and reasonable expenses incurred in carrying on the business; and (2) the net income of the gambler, if any, is subject to self-employment tax under Section 1401 of the Code.
In 2014, on this blog, I provided a discussion about the taxation of a full-time gambler. In that article, I provided some updates and additional insights on that topic.
A brief overview of the applicable law is necessary for this discussion. Code Section 162(a) generally allows a deduction for "all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business". Code Section 165(d), originally enacted as Section 23(g) of the Revenue Act of 1934, however, provides that "[l]osses from wagering transactions shall be allowed only to the extent of the gains from such transactions."
In this second installment of our multi-part series on the One Big Beautiful Bill Act (the “Act”), my colleague David Knutson and I discuss the changes made by the Act to the federal estate and gift tax regime.
Background
The federal government taxes wealth transfers in three ways:
- Estate tax is imposed on the value of estates at death;
- Gift tax is imposed on the value of gifts made during life; and
- Generation-skipping tax is imposed on the value of a bequest/gift made to a person two or more generations younger than the taxpayer.
No tax is due on the above wealth transfers until the value of the aggregate gifts/bequests exceeds an applicable exemption. This basic structure has been in place for decades. The exemption amounts and the tax rates, however, have changed over the years.
On July 1, 2025, the One Big Beautiful Bill Act, H.R.1 – 199th Congress (2025-2026) (the “Act”) was passed in the U.S. Senate (“Senate”). On July 3, 2025, it was passed in the U.S. House of Representatives (“House”) and presented to President Trump to be signed into law. On July 4, 2025, the President signed the Act into law.
I intend to present several installments on my blog featuring some of the most important tax provisions of the Act, allowing us to break down these provisions in detail. This first installment is a continuation of my coverage of the SALT deduction provision of the Act.
As reported on May 16, 2025, the SALT cap proposal contained in the legislation that was pending in the U.S. House of Representatives (“House”) aimed at, among other things, dealing with the expiring provisions of the Tax Cuts and Jobs Act (“TCJA”) was not well received by lawmakers from high-income tax states such as Oregon, New York, Hawaii and California. That proposal increased the SALT cap from $10,000 to $30,000, but it contained a downward adjustment for taxpayers with “modified adjusted gross income” over $400,000. For this purpose, modified adjusted gross income is adjusted gross income plus any amounts excluded from income under Code Sections 911, 931 and 933. Under that proposal, the $30,000 cap is reduced by 20% of a taxpayer’s modified adjusted gross income to the extent it exceeds $400,000 ($200,000 in the case of a married taxpayer filing separately). However, the SALT cap cannot be reduced below $10,000 ($5,000 in the case of a married taxpayer filing separately).
It appears the SALT cap proposal may have been the last item holding up the passage of the bill by members of the House. After hours of debate and discussion, the proposal was modified, and the House passed the bill on May 22, 2025. It now sits in the U.S. Senate (“Senate”), where it is expected this provision of the bill, among others, will face fierce debate.
As reported on May 13, 2025, several changes to the Washington state tax laws were passed by lawmakers and delivered to the desk of Governor Ferguson in late April, awaiting his signature to make them law. In the aggregate, these changes create what is likely the largest historical increase in taxes the state has ever seen. While there was some speculation that the governor would not sign all of the bills into law, especially since they had been sitting on his desk for more than three weeks, that speculation is no longer. Governor Ferguson signed these bills into law on May 20, 2025.
Oregon House Bill 3115 (“HB 3115”) was sponsored by Representatives John Lively (D) and Kimberly Wallan (R). It was co-sponsored by Representatives Tom Anderson (D), David Gomberg (D) and Nathan Sosa (D).
HB 3115 was introduced in the Oregon House of Representatives (“House”) on January 13, 2025. It passed the House on March 17, 2025. The legislation was introduced in the Oregon Senate (“Senate”) on March 18, 2025. It passed in the Senate on April 29, 2025. The bill was signed by the Speaker of the House and the President of the Senate on May 1, 2025. Governor Kotek signed HB 3115 on May 8, 2025. The bill becomes law 91 days following adjournment sine die (i.e., the final adjournment of the legislative session).
Background
Prior to the Tax Cuts and Jobs Act (“TCJA”), there was no direct limitation on an individual taxpayer’s deduction of his or her state and local taxes (“SALT”) on the federal individual income tax return. Of course, for high-income taxpayers, the SALT deduction often triggered the alternative minimum tax.
As of 2018, as a result of the TCJA, the SALT deduction for individuals was capped at $10,000 per year for both single and married taxpayers filing jointly ($5,000 for married taxpayers filing separately). Hence, the cap contains an inherent “marriage penalty.”
The SALT cap was added to the TCJA, in part, as a compromise for an increase in the standard deduction (almost doubling it from pre-TCJA days). It is, however, set to sunset at the end of this year.
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Larry J. Brant
Editor
Larry J. Brant is a Shareholder and the Chair of the Tax & Benefits practice group at Foster Garvey, a law firm based out of the Pacific Northwest, with offices in Seattle, Washington; Portland, Oregon; Washington, D.C.; New York, New York, Spokane, Washington; Tulsa, Oklahoma; and Beijing, China. Mr. Brant is licensed to practice in Oregon and Washington. His practice focuses on tax, tax controversy and transactions. Mr. Brant is a past Chair of the Oregon State Bar Taxation Section. He was the long-term Chair of the Oregon Tax Institute, and is currently a member of the Board of Directors of the Portland Tax Forum. Mr. Brant has served as an adjunct professor, teaching corporate taxation, at Northwestern School of Law, Lewis and Clark College. He is an Expert Contributor to Thomson Reuters Checkpoint Catalyst. Mr. Brant is a Fellow in the American College of Tax Counsel. He publishes articles on numerous income tax issues, including Taxation of S Corporations, Reasonable Compensation, Circular 230, Worker Classification, IRC § 1031 Exchanges, Choice of Entity, Entity Tax Classification, and State and Local Taxation. Mr. Brant is a frequent lecturer at local, regional and national tax and business conferences for CPAs and attorneys. He was the 2015 Recipient of the Oregon State Bar Tax Section Award of Merit.
