August 15, 2018
In This Issue:
- Good News for Title Industry in Proposed IRS Guidance
- TDI's Call for 2017 Statistical Data Not Issued Yet
- Fate of Wall Street Watchdog Devolves Into a Squabble Over Acronyms
- Testing the GSEs’ Performance in Adverse Conditions
Good News for Title Industry in Proposed IRS Guidance
ALTA | Aug. 14, 2018
Last week, the Internal Revenue Service (IRS) issued proposed regulations outlining which pass-through businesses will be eligible for the 20-percent deduction enacted as part of the Tax Cuts and Jobs Act (TCJA). In a big win for ALTA members, the IRS took a narrow reading of the law and will allow insurance agents and real estate professionals to qualify for the deduction.
The TCJA provided a new deduction for up to 20 percent of qualified business income (QBI). This is income derived by a sole proprietorship, partnership, S corporation or trust. This was meant to create parity with the new lower corporate tax rate. Under the TCJA, the top marginal tax rate on QBI that qualifies for the 20-percent deduction under the law is 29.6 percent.
To prevent potential abuse, the law excluded "specified service businesses" from eligibility for the deduction. These are business that are defined by 26 USC 1202(e)(3)(A), which includes "any trade or business involving the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of 1 or more of its employees."
Which businesses would constitute a "specialized service trade or business," was a major focus of lobbying by ALTA and other financial services trade groups around implementation of the TCJA.
The proposal specifically defines "financial services" and "brokerage services" to not include insurance and real estate professionals. This should be helpful for title agents that are not conducting the practice of law to qualify for the deduction.
Agents that obtain business income from a source that is excluded (like attorneys) can still qualify for a limited deduction if their taxable income is less than $315,000 (for married taxpayers filing a joint return) or $157,500 (for individuals).
The guidance also covers rules for aggregation and separation of business income to help take advantage of the deduction. ALTA will continue to analyze the proposal and will submit comments to Treasury and the IRS. Comments are due 45 days after publication in the Federal Register. If you have questions, please reach out to Steve Gottheim
, ALTA's senior counsel, at firstname.lastname@example.org
TDI's Call for 2017 Statistical Data Not Issued Yet
TLTA | Aug. 13, 2018
TLTA has received a number of questions in recent weeks about the status of TDI's 2017 call for Statistical Data. The call has not been issued yet, and we do not have a projected date to report. We are monitoring the status with TDI, though; and as soon as we get any details about the timeframe for this annual report, we’ll send them your way.
ICYMI: The 2016 agents statistical report
was released earlier this summer. A catalog of agents' statistical reports from 2008-2016 can be found here
Fate of Wall Street Watchdog Devolves Into a Squabble Over Acronyms
Roll Call | Aug. 8, 2018
Only in Washington would an argument erupt over a federal agency’s acronym.
To progressives, the agency is the Consumer Financial Protection Bureau, or the CFPB, which took on Wall Street and won compensation for more than 27 million consumers during its startup years under former Director Richard Cordray.
To conservatives, it is the overly powerful Bureau of Consumer Financial Protection, or the BCFP, which is its legal name.
Conservatives say the bureau has frequently overstepped its bounds and Republicans will rein it in, starting with calling it by its legal name, said Norbert Michel, a senior fellow in the study of financial services at Heritage Foundation.
“They’re making the point that what’s in the statute is what they should be doing,” he said, acknowledging it won’t be easy. “I can’t even say it,” he said of BCFP. “I trip over it if I try to say it the other way. I mess it all up. So I just keep saying CFPB.”
Read More »
Testing the GSEs’ Performance in Adverse Conditions
MReport | Aug. 7, 2018
A more severe decline in housing prices is most likely to contribute to credit losses at Fannie Mae
and Freddie Mac
, in case of a severely adverse economic scenario, according to the results of the 2018 Dodd-Frank Act Stress Test (DFAST) results for both the government-sponsored enterprises (GSEs) released by the Federal Housing Finance Agency (FHFA)
The combined comprehensive losses for the GSEs increased in the 2018 DFAST
, with provision for credit losses being the largest contributor to the comprehensive combined losses of Fannie Mae and Freddie Mac. The global market shock impact on trading securities and available-for-sale securities would also impact the bottom line of both GSEs.
Read More »
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