Webinar Slides: The 2016 Election – Key Races and the Expected Impact on the Construction Industry
93
#cbizmhmwebinar 1 CBIZ & MHM Executive Education Series™ The 2016 Election – Key Races and the Expected Impact on the Construction Industry Brian Lenihan, Associated General Contractors Chris Singerling, Associated Builders and Contractors October 25, 2016
The 2016 Election ndash Key Races and the Expected Impact on the Construction Industry Brian Lenihan Associated General Contractors Chris Singerling Associated Builders and Contractors October 25 2016
cbizmhmwebinar 2
About CBIZ amp MHM
bull Together CBIZ amp MHM are a Top Ten accounting provider bull Offices in most major markets bull Tax audit and attest and advisory services bull Over 2900 professionals nationwide
A member of Kreston International A global network of independent
accounting firms
MHM (Mayer Hoffman McCann PC) is an independent CPA firm that provides audit review and attest services and works closely with CBIZ a business consulting tax and financial services provider CBIZ and MHM are members of Kreston International Limited a global network of independent accounting firms
cbizmhmwebinar 3
About AGC of America
The Associated General Contractors of America (AGC) is the leading association for the construction industry
AGC represents more than 26000 firms including over 6500 of Americarsquos leading general contractors and over 9000 specialty-contracting firms
More than 10500 service providers and suppliers are also associated with AGC all through a nationwide network of chapters
cbizmhmwebinar 4
About ABC
Associated Builders and Contractors (ABC) is a national construction industry trade association representing nearly 21000 chapter members
Founded on the merit shop philosophy ABC and its 70 chapters help members develop people win work and deliver that work safely ethically profitably and for the betterment of the communities in which ABC and its members work
ABCs membership represents all specialties within the US construction industry and is comprised primarily of firms that perform work in the industrial and commercial sectors
cbizmhmwebinar 5
Before We Get Startedhellip
bull To view this webinar in full screen mode click on view options in the upper right hand corner
bull Click the Support tab for technical assistance
bull If you have a question during the presentation please use the QampA feature at the bottom of your screen
cbizmhmwebinar 6
CPE Credit
This webinar is eligible for CPE credit To receive credit you will need to answer periodic participation markers throughout the webinar External participants will receive their CPE certificate via email immediately following the webinar
cbizmhmwebinar 7
Disclaimer
The information in this Executive Education Series course is a brief summary and may not include all
the details relevant to your situation
Please contact your service provider to further discuss the impact on your business
cbizmhmwebinar 8
Presenter ndash Brian Lenihan
Brian is a government affairs professional with over 13 years of experience As AGCrsquos Director
of Tax amp Fiscal Affairs he oversees the development and advocacy of the industryrsquos positions
on tax and accounting issues in consultation with AGCrsquos CFO and CPA membership owners
and other AGC subject matter experts
Previously as a senior aide for a member of the House Ways amp Means Committee Brian
formulated and executed a legislative agenda focusing on tax and health issues In previous
positions he represented a number of clients before Congress including top publically-traded
companies municipalities defense contractors development authorities small businesses and
non-profit organizations
Brian has worked on over 30 House and Senate campaigns since 2004 A core team member
recruiting managing and coordinating over 150 volunteers each cycle he has fundraised and
implemented six-figure campaign budgets for get-out-the-vote ground operations in the
perennial battleground state of Ohio
Brian is involved with over 15 business coalitions focused on tax health pension and employer
issues Brian is a frequent speaker and panelist for tax meetings and briefings in DC and
around the country Brian earned a Political Science degree from the
University of Central Florida and resides with his wife amp children in
Virginia
cbizmhmwebinar 9
Presenter ndash Chris Singerling
Chris is senior director of political affairs at Associated Builders and
Contractors Inc in Washington DC In this capacity he supervises plans
and directs ABCrsquos political action committee (ABC PAC) its issue
advocacy arm the Free Enterprise Alliance and all other national political
efforts
Mr Singerling brings to ABC more than 12 years of experience on Capitol
Hill
Prior to joining ABC he served in a variety of positions for five different
Members of Congress most recently as political director for former
Congressman John Boehner (R-Ohio)
cbizmhmwebinar 10
Moderators
ANTHONY HAKES National Construction Industry
Practice Group Leader CBIZ amp MHM
TONY STAGLIANO National Construction Industry Practice
Group Member CBIZ amp MHM
cbizmhmwebinar 11
Agenda
Year to Date
02
01
03
04
Players in 2016
Candidates
POTUS and Veep
05 Timetable
06 Content
07 Strategy
08 Outlook
cbizmhmwebinar 12
White House priorities Regulations bull Section 385 ndash related-party debt as equity (inversions) bull Section 2704 ndash Minority Valuation Discounts (estate tax) bull Section 199 ndash substantial renovation
Congress passed bull Significant Medicare overhaul (Doc Fix) bull Overhaul of domestic surveillance programs (FISA) bull Fast-track trade authority coveted by GOP leadership and President Obama bull 6-year Highway Authorization (3 years of funding in FAST Act) bull 2-year budget deal amp various tax provisions made permanent (PATH Act) bull A bill to strengthen the Miscellaneous Tariff Bill (MTB) process bull Puerto Rico Oversight and Economic Stability Act (PR Default Relief)
Admin amp Congress
cbizmhmwebinar 13
bull July 30 - Treasury announced extraordinary measures to avoid govrsquot default
bull September 25 - Speaker Boehner announced that he will resign from his position
bull October 29 - WampM Chairman Paul Ryan (R-WI) is elected Speaker of the House
bull November 2 - President signed budget package (includes debt limit suspension)
bull November 5 - Kevin Brady (R-TX) selected to serve as chairman of WampM
bull November 19 - Treasury announced additional actions to curb corporate inversions
bull December 3 - Congress approved 6-year highway authorization (FAST Act)
bull December 18 - Govrsquot funded via Omnibus Appropriations amp Tax Extenders (PATH Act)
Major Events in 2015
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 2
About CBIZ amp MHM
bull Together CBIZ amp MHM are a Top Ten accounting provider bull Offices in most major markets bull Tax audit and attest and advisory services bull Over 2900 professionals nationwide
A member of Kreston International A global network of independent
accounting firms
MHM (Mayer Hoffman McCann PC) is an independent CPA firm that provides audit review and attest services and works closely with CBIZ a business consulting tax and financial services provider CBIZ and MHM are members of Kreston International Limited a global network of independent accounting firms
cbizmhmwebinar 3
About AGC of America
The Associated General Contractors of America (AGC) is the leading association for the construction industry
AGC represents more than 26000 firms including over 6500 of Americarsquos leading general contractors and over 9000 specialty-contracting firms
More than 10500 service providers and suppliers are also associated with AGC all through a nationwide network of chapters
cbizmhmwebinar 4
About ABC
Associated Builders and Contractors (ABC) is a national construction industry trade association representing nearly 21000 chapter members
Founded on the merit shop philosophy ABC and its 70 chapters help members develop people win work and deliver that work safely ethically profitably and for the betterment of the communities in which ABC and its members work
ABCs membership represents all specialties within the US construction industry and is comprised primarily of firms that perform work in the industrial and commercial sectors
cbizmhmwebinar 5
Before We Get Startedhellip
bull To view this webinar in full screen mode click on view options in the upper right hand corner
bull Click the Support tab for technical assistance
bull If you have a question during the presentation please use the QampA feature at the bottom of your screen
cbizmhmwebinar 6
CPE Credit
This webinar is eligible for CPE credit To receive credit you will need to answer periodic participation markers throughout the webinar External participants will receive their CPE certificate via email immediately following the webinar
cbizmhmwebinar 7
Disclaimer
The information in this Executive Education Series course is a brief summary and may not include all
the details relevant to your situation
Please contact your service provider to further discuss the impact on your business
cbizmhmwebinar 8
Presenter ndash Brian Lenihan
Brian is a government affairs professional with over 13 years of experience As AGCrsquos Director
of Tax amp Fiscal Affairs he oversees the development and advocacy of the industryrsquos positions
on tax and accounting issues in consultation with AGCrsquos CFO and CPA membership owners
and other AGC subject matter experts
Previously as a senior aide for a member of the House Ways amp Means Committee Brian
formulated and executed a legislative agenda focusing on tax and health issues In previous
positions he represented a number of clients before Congress including top publically-traded
companies municipalities defense contractors development authorities small businesses and
non-profit organizations
Brian has worked on over 30 House and Senate campaigns since 2004 A core team member
recruiting managing and coordinating over 150 volunteers each cycle he has fundraised and
implemented six-figure campaign budgets for get-out-the-vote ground operations in the
perennial battleground state of Ohio
Brian is involved with over 15 business coalitions focused on tax health pension and employer
issues Brian is a frequent speaker and panelist for tax meetings and briefings in DC and
around the country Brian earned a Political Science degree from the
University of Central Florida and resides with his wife amp children in
Virginia
cbizmhmwebinar 9
Presenter ndash Chris Singerling
Chris is senior director of political affairs at Associated Builders and
Contractors Inc in Washington DC In this capacity he supervises plans
and directs ABCrsquos political action committee (ABC PAC) its issue
advocacy arm the Free Enterprise Alliance and all other national political
efforts
Mr Singerling brings to ABC more than 12 years of experience on Capitol
Hill
Prior to joining ABC he served in a variety of positions for five different
Members of Congress most recently as political director for former
Congressman John Boehner (R-Ohio)
cbizmhmwebinar 10
Moderators
ANTHONY HAKES National Construction Industry
Practice Group Leader CBIZ amp MHM
TONY STAGLIANO National Construction Industry Practice
Group Member CBIZ amp MHM
cbizmhmwebinar 11
Agenda
Year to Date
02
01
03
04
Players in 2016
Candidates
POTUS and Veep
05 Timetable
06 Content
07 Strategy
08 Outlook
cbizmhmwebinar 12
White House priorities Regulations bull Section 385 ndash related-party debt as equity (inversions) bull Section 2704 ndash Minority Valuation Discounts (estate tax) bull Section 199 ndash substantial renovation
Congress passed bull Significant Medicare overhaul (Doc Fix) bull Overhaul of domestic surveillance programs (FISA) bull Fast-track trade authority coveted by GOP leadership and President Obama bull 6-year Highway Authorization (3 years of funding in FAST Act) bull 2-year budget deal amp various tax provisions made permanent (PATH Act) bull A bill to strengthen the Miscellaneous Tariff Bill (MTB) process bull Puerto Rico Oversight and Economic Stability Act (PR Default Relief)
Admin amp Congress
cbizmhmwebinar 13
bull July 30 - Treasury announced extraordinary measures to avoid govrsquot default
bull September 25 - Speaker Boehner announced that he will resign from his position
bull October 29 - WampM Chairman Paul Ryan (R-WI) is elected Speaker of the House
bull November 2 - President signed budget package (includes debt limit suspension)
bull November 5 - Kevin Brady (R-TX) selected to serve as chairman of WampM
bull November 19 - Treasury announced additional actions to curb corporate inversions
bull December 3 - Congress approved 6-year highway authorization (FAST Act)
bull December 18 - Govrsquot funded via Omnibus Appropriations amp Tax Extenders (PATH Act)
Major Events in 2015
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 3
About AGC of America
The Associated General Contractors of America (AGC) is the leading association for the construction industry
AGC represents more than 26000 firms including over 6500 of Americarsquos leading general contractors and over 9000 specialty-contracting firms
More than 10500 service providers and suppliers are also associated with AGC all through a nationwide network of chapters
cbizmhmwebinar 4
About ABC
Associated Builders and Contractors (ABC) is a national construction industry trade association representing nearly 21000 chapter members
Founded on the merit shop philosophy ABC and its 70 chapters help members develop people win work and deliver that work safely ethically profitably and for the betterment of the communities in which ABC and its members work
ABCs membership represents all specialties within the US construction industry and is comprised primarily of firms that perform work in the industrial and commercial sectors
cbizmhmwebinar 5
Before We Get Startedhellip
bull To view this webinar in full screen mode click on view options in the upper right hand corner
bull Click the Support tab for technical assistance
bull If you have a question during the presentation please use the QampA feature at the bottom of your screen
cbizmhmwebinar 6
CPE Credit
This webinar is eligible for CPE credit To receive credit you will need to answer periodic participation markers throughout the webinar External participants will receive their CPE certificate via email immediately following the webinar
cbizmhmwebinar 7
Disclaimer
The information in this Executive Education Series course is a brief summary and may not include all
the details relevant to your situation
Please contact your service provider to further discuss the impact on your business
cbizmhmwebinar 8
Presenter ndash Brian Lenihan
Brian is a government affairs professional with over 13 years of experience As AGCrsquos Director
of Tax amp Fiscal Affairs he oversees the development and advocacy of the industryrsquos positions
on tax and accounting issues in consultation with AGCrsquos CFO and CPA membership owners
and other AGC subject matter experts
Previously as a senior aide for a member of the House Ways amp Means Committee Brian
formulated and executed a legislative agenda focusing on tax and health issues In previous
positions he represented a number of clients before Congress including top publically-traded
companies municipalities defense contractors development authorities small businesses and
non-profit organizations
Brian has worked on over 30 House and Senate campaigns since 2004 A core team member
recruiting managing and coordinating over 150 volunteers each cycle he has fundraised and
implemented six-figure campaign budgets for get-out-the-vote ground operations in the
perennial battleground state of Ohio
Brian is involved with over 15 business coalitions focused on tax health pension and employer
issues Brian is a frequent speaker and panelist for tax meetings and briefings in DC and
around the country Brian earned a Political Science degree from the
University of Central Florida and resides with his wife amp children in
Virginia
cbizmhmwebinar 9
Presenter ndash Chris Singerling
Chris is senior director of political affairs at Associated Builders and
Contractors Inc in Washington DC In this capacity he supervises plans
and directs ABCrsquos political action committee (ABC PAC) its issue
advocacy arm the Free Enterprise Alliance and all other national political
efforts
Mr Singerling brings to ABC more than 12 years of experience on Capitol
Hill
Prior to joining ABC he served in a variety of positions for five different
Members of Congress most recently as political director for former
Congressman John Boehner (R-Ohio)
cbizmhmwebinar 10
Moderators
ANTHONY HAKES National Construction Industry
Practice Group Leader CBIZ amp MHM
TONY STAGLIANO National Construction Industry Practice
Group Member CBIZ amp MHM
cbizmhmwebinar 11
Agenda
Year to Date
02
01
03
04
Players in 2016
Candidates
POTUS and Veep
05 Timetable
06 Content
07 Strategy
08 Outlook
cbizmhmwebinar 12
White House priorities Regulations bull Section 385 ndash related-party debt as equity (inversions) bull Section 2704 ndash Minority Valuation Discounts (estate tax) bull Section 199 ndash substantial renovation
Congress passed bull Significant Medicare overhaul (Doc Fix) bull Overhaul of domestic surveillance programs (FISA) bull Fast-track trade authority coveted by GOP leadership and President Obama bull 6-year Highway Authorization (3 years of funding in FAST Act) bull 2-year budget deal amp various tax provisions made permanent (PATH Act) bull A bill to strengthen the Miscellaneous Tariff Bill (MTB) process bull Puerto Rico Oversight and Economic Stability Act (PR Default Relief)
Admin amp Congress
cbizmhmwebinar 13
bull July 30 - Treasury announced extraordinary measures to avoid govrsquot default
bull September 25 - Speaker Boehner announced that he will resign from his position
bull October 29 - WampM Chairman Paul Ryan (R-WI) is elected Speaker of the House
bull November 2 - President signed budget package (includes debt limit suspension)
bull November 5 - Kevin Brady (R-TX) selected to serve as chairman of WampM
bull November 19 - Treasury announced additional actions to curb corporate inversions
bull December 3 - Congress approved 6-year highway authorization (FAST Act)
bull December 18 - Govrsquot funded via Omnibus Appropriations amp Tax Extenders (PATH Act)
Major Events in 2015
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 4
About ABC
Associated Builders and Contractors (ABC) is a national construction industry trade association representing nearly 21000 chapter members
Founded on the merit shop philosophy ABC and its 70 chapters help members develop people win work and deliver that work safely ethically profitably and for the betterment of the communities in which ABC and its members work
ABCs membership represents all specialties within the US construction industry and is comprised primarily of firms that perform work in the industrial and commercial sectors
cbizmhmwebinar 5
Before We Get Startedhellip
bull To view this webinar in full screen mode click on view options in the upper right hand corner
bull Click the Support tab for technical assistance
bull If you have a question during the presentation please use the QampA feature at the bottom of your screen
cbizmhmwebinar 6
CPE Credit
This webinar is eligible for CPE credit To receive credit you will need to answer periodic participation markers throughout the webinar External participants will receive their CPE certificate via email immediately following the webinar
cbizmhmwebinar 7
Disclaimer
The information in this Executive Education Series course is a brief summary and may not include all
the details relevant to your situation
Please contact your service provider to further discuss the impact on your business
cbizmhmwebinar 8
Presenter ndash Brian Lenihan
Brian is a government affairs professional with over 13 years of experience As AGCrsquos Director
of Tax amp Fiscal Affairs he oversees the development and advocacy of the industryrsquos positions
on tax and accounting issues in consultation with AGCrsquos CFO and CPA membership owners
and other AGC subject matter experts
Previously as a senior aide for a member of the House Ways amp Means Committee Brian
formulated and executed a legislative agenda focusing on tax and health issues In previous
positions he represented a number of clients before Congress including top publically-traded
companies municipalities defense contractors development authorities small businesses and
non-profit organizations
Brian has worked on over 30 House and Senate campaigns since 2004 A core team member
recruiting managing and coordinating over 150 volunteers each cycle he has fundraised and
implemented six-figure campaign budgets for get-out-the-vote ground operations in the
perennial battleground state of Ohio
Brian is involved with over 15 business coalitions focused on tax health pension and employer
issues Brian is a frequent speaker and panelist for tax meetings and briefings in DC and
around the country Brian earned a Political Science degree from the
University of Central Florida and resides with his wife amp children in
Virginia
cbizmhmwebinar 9
Presenter ndash Chris Singerling
Chris is senior director of political affairs at Associated Builders and
Contractors Inc in Washington DC In this capacity he supervises plans
and directs ABCrsquos political action committee (ABC PAC) its issue
advocacy arm the Free Enterprise Alliance and all other national political
efforts
Mr Singerling brings to ABC more than 12 years of experience on Capitol
Hill
Prior to joining ABC he served in a variety of positions for five different
Members of Congress most recently as political director for former
Congressman John Boehner (R-Ohio)
cbizmhmwebinar 10
Moderators
ANTHONY HAKES National Construction Industry
Practice Group Leader CBIZ amp MHM
TONY STAGLIANO National Construction Industry Practice
Group Member CBIZ amp MHM
cbizmhmwebinar 11
Agenda
Year to Date
02
01
03
04
Players in 2016
Candidates
POTUS and Veep
05 Timetable
06 Content
07 Strategy
08 Outlook
cbizmhmwebinar 12
White House priorities Regulations bull Section 385 ndash related-party debt as equity (inversions) bull Section 2704 ndash Minority Valuation Discounts (estate tax) bull Section 199 ndash substantial renovation
Congress passed bull Significant Medicare overhaul (Doc Fix) bull Overhaul of domestic surveillance programs (FISA) bull Fast-track trade authority coveted by GOP leadership and President Obama bull 6-year Highway Authorization (3 years of funding in FAST Act) bull 2-year budget deal amp various tax provisions made permanent (PATH Act) bull A bill to strengthen the Miscellaneous Tariff Bill (MTB) process bull Puerto Rico Oversight and Economic Stability Act (PR Default Relief)
Admin amp Congress
cbizmhmwebinar 13
bull July 30 - Treasury announced extraordinary measures to avoid govrsquot default
bull September 25 - Speaker Boehner announced that he will resign from his position
bull October 29 - WampM Chairman Paul Ryan (R-WI) is elected Speaker of the House
bull November 2 - President signed budget package (includes debt limit suspension)
bull November 5 - Kevin Brady (R-TX) selected to serve as chairman of WampM
bull November 19 - Treasury announced additional actions to curb corporate inversions
bull December 3 - Congress approved 6-year highway authorization (FAST Act)
bull December 18 - Govrsquot funded via Omnibus Appropriations amp Tax Extenders (PATH Act)
Major Events in 2015
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 5
Before We Get Startedhellip
bull To view this webinar in full screen mode click on view options in the upper right hand corner
bull Click the Support tab for technical assistance
bull If you have a question during the presentation please use the QampA feature at the bottom of your screen
cbizmhmwebinar 6
CPE Credit
This webinar is eligible for CPE credit To receive credit you will need to answer periodic participation markers throughout the webinar External participants will receive their CPE certificate via email immediately following the webinar
cbizmhmwebinar 7
Disclaimer
The information in this Executive Education Series course is a brief summary and may not include all
the details relevant to your situation
Please contact your service provider to further discuss the impact on your business
cbizmhmwebinar 8
Presenter ndash Brian Lenihan
Brian is a government affairs professional with over 13 years of experience As AGCrsquos Director
of Tax amp Fiscal Affairs he oversees the development and advocacy of the industryrsquos positions
on tax and accounting issues in consultation with AGCrsquos CFO and CPA membership owners
and other AGC subject matter experts
Previously as a senior aide for a member of the House Ways amp Means Committee Brian
formulated and executed a legislative agenda focusing on tax and health issues In previous
positions he represented a number of clients before Congress including top publically-traded
companies municipalities defense contractors development authorities small businesses and
non-profit organizations
Brian has worked on over 30 House and Senate campaigns since 2004 A core team member
recruiting managing and coordinating over 150 volunteers each cycle he has fundraised and
implemented six-figure campaign budgets for get-out-the-vote ground operations in the
perennial battleground state of Ohio
Brian is involved with over 15 business coalitions focused on tax health pension and employer
issues Brian is a frequent speaker and panelist for tax meetings and briefings in DC and
around the country Brian earned a Political Science degree from the
University of Central Florida and resides with his wife amp children in
Virginia
cbizmhmwebinar 9
Presenter ndash Chris Singerling
Chris is senior director of political affairs at Associated Builders and
Contractors Inc in Washington DC In this capacity he supervises plans
and directs ABCrsquos political action committee (ABC PAC) its issue
advocacy arm the Free Enterprise Alliance and all other national political
efforts
Mr Singerling brings to ABC more than 12 years of experience on Capitol
Hill
Prior to joining ABC he served in a variety of positions for five different
Members of Congress most recently as political director for former
Congressman John Boehner (R-Ohio)
cbizmhmwebinar 10
Moderators
ANTHONY HAKES National Construction Industry
Practice Group Leader CBIZ amp MHM
TONY STAGLIANO National Construction Industry Practice
Group Member CBIZ amp MHM
cbizmhmwebinar 11
Agenda
Year to Date
02
01
03
04
Players in 2016
Candidates
POTUS and Veep
05 Timetable
06 Content
07 Strategy
08 Outlook
cbizmhmwebinar 12
White House priorities Regulations bull Section 385 ndash related-party debt as equity (inversions) bull Section 2704 ndash Minority Valuation Discounts (estate tax) bull Section 199 ndash substantial renovation
Congress passed bull Significant Medicare overhaul (Doc Fix) bull Overhaul of domestic surveillance programs (FISA) bull Fast-track trade authority coveted by GOP leadership and President Obama bull 6-year Highway Authorization (3 years of funding in FAST Act) bull 2-year budget deal amp various tax provisions made permanent (PATH Act) bull A bill to strengthen the Miscellaneous Tariff Bill (MTB) process bull Puerto Rico Oversight and Economic Stability Act (PR Default Relief)
Admin amp Congress
cbizmhmwebinar 13
bull July 30 - Treasury announced extraordinary measures to avoid govrsquot default
bull September 25 - Speaker Boehner announced that he will resign from his position
bull October 29 - WampM Chairman Paul Ryan (R-WI) is elected Speaker of the House
bull November 2 - President signed budget package (includes debt limit suspension)
bull November 5 - Kevin Brady (R-TX) selected to serve as chairman of WampM
bull November 19 - Treasury announced additional actions to curb corporate inversions
bull December 3 - Congress approved 6-year highway authorization (FAST Act)
bull December 18 - Govrsquot funded via Omnibus Appropriations amp Tax Extenders (PATH Act)
Major Events in 2015
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 6
CPE Credit
This webinar is eligible for CPE credit To receive credit you will need to answer periodic participation markers throughout the webinar External participants will receive their CPE certificate via email immediately following the webinar
cbizmhmwebinar 7
Disclaimer
The information in this Executive Education Series course is a brief summary and may not include all
the details relevant to your situation
Please contact your service provider to further discuss the impact on your business
cbizmhmwebinar 8
Presenter ndash Brian Lenihan
Brian is a government affairs professional with over 13 years of experience As AGCrsquos Director
of Tax amp Fiscal Affairs he oversees the development and advocacy of the industryrsquos positions
on tax and accounting issues in consultation with AGCrsquos CFO and CPA membership owners
and other AGC subject matter experts
Previously as a senior aide for a member of the House Ways amp Means Committee Brian
formulated and executed a legislative agenda focusing on tax and health issues In previous
positions he represented a number of clients before Congress including top publically-traded
companies municipalities defense contractors development authorities small businesses and
non-profit organizations
Brian has worked on over 30 House and Senate campaigns since 2004 A core team member
recruiting managing and coordinating over 150 volunteers each cycle he has fundraised and
implemented six-figure campaign budgets for get-out-the-vote ground operations in the
perennial battleground state of Ohio
Brian is involved with over 15 business coalitions focused on tax health pension and employer
issues Brian is a frequent speaker and panelist for tax meetings and briefings in DC and
around the country Brian earned a Political Science degree from the
University of Central Florida and resides with his wife amp children in
Virginia
cbizmhmwebinar 9
Presenter ndash Chris Singerling
Chris is senior director of political affairs at Associated Builders and
Contractors Inc in Washington DC In this capacity he supervises plans
and directs ABCrsquos political action committee (ABC PAC) its issue
advocacy arm the Free Enterprise Alliance and all other national political
efforts
Mr Singerling brings to ABC more than 12 years of experience on Capitol
Hill
Prior to joining ABC he served in a variety of positions for five different
Members of Congress most recently as political director for former
Congressman John Boehner (R-Ohio)
cbizmhmwebinar 10
Moderators
ANTHONY HAKES National Construction Industry
Practice Group Leader CBIZ amp MHM
TONY STAGLIANO National Construction Industry Practice
Group Member CBIZ amp MHM
cbizmhmwebinar 11
Agenda
Year to Date
02
01
03
04
Players in 2016
Candidates
POTUS and Veep
05 Timetable
06 Content
07 Strategy
08 Outlook
cbizmhmwebinar 12
White House priorities Regulations bull Section 385 ndash related-party debt as equity (inversions) bull Section 2704 ndash Minority Valuation Discounts (estate tax) bull Section 199 ndash substantial renovation
Congress passed bull Significant Medicare overhaul (Doc Fix) bull Overhaul of domestic surveillance programs (FISA) bull Fast-track trade authority coveted by GOP leadership and President Obama bull 6-year Highway Authorization (3 years of funding in FAST Act) bull 2-year budget deal amp various tax provisions made permanent (PATH Act) bull A bill to strengthen the Miscellaneous Tariff Bill (MTB) process bull Puerto Rico Oversight and Economic Stability Act (PR Default Relief)
Admin amp Congress
cbizmhmwebinar 13
bull July 30 - Treasury announced extraordinary measures to avoid govrsquot default
bull September 25 - Speaker Boehner announced that he will resign from his position
bull October 29 - WampM Chairman Paul Ryan (R-WI) is elected Speaker of the House
bull November 2 - President signed budget package (includes debt limit suspension)
bull November 5 - Kevin Brady (R-TX) selected to serve as chairman of WampM
bull November 19 - Treasury announced additional actions to curb corporate inversions
bull December 3 - Congress approved 6-year highway authorization (FAST Act)
bull December 18 - Govrsquot funded via Omnibus Appropriations amp Tax Extenders (PATH Act)
Major Events in 2015
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Congress passed bull Significant Medicare overhaul (Doc Fix) bull Overhaul of domestic surveillance programs (FISA) bull Fast-track trade authority coveted by GOP leadership and President Obama bull 6-year Highway Authorization (3 years of funding in FAST Act) bull 2-year budget deal amp various tax provisions made permanent (PATH Act) bull A bill to strengthen the Miscellaneous Tariff Bill (MTB) process bull Puerto Rico Oversight and Economic Stability Act (PR Default Relief)
Admin amp Congress
cbizmhmwebinar 13
bull July 30 - Treasury announced extraordinary measures to avoid govrsquot default
bull September 25 - Speaker Boehner announced that he will resign from his position
bull October 29 - WampM Chairman Paul Ryan (R-WI) is elected Speaker of the House
bull November 2 - President signed budget package (includes debt limit suspension)
bull November 5 - Kevin Brady (R-TX) selected to serve as chairman of WampM
bull November 19 - Treasury announced additional actions to curb corporate inversions
bull December 3 - Congress approved 6-year highway authorization (FAST Act)
bull December 18 - Govrsquot funded via Omnibus Appropriations amp Tax Extenders (PATH Act)
Major Events in 2015
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Congress passed bull Significant Medicare overhaul (Doc Fix) bull Overhaul of domestic surveillance programs (FISA) bull Fast-track trade authority coveted by GOP leadership and President Obama bull 6-year Highway Authorization (3 years of funding in FAST Act) bull 2-year budget deal amp various tax provisions made permanent (PATH Act) bull A bill to strengthen the Miscellaneous Tariff Bill (MTB) process bull Puerto Rico Oversight and Economic Stability Act (PR Default Relief)
Admin amp Congress
cbizmhmwebinar 13
bull July 30 - Treasury announced extraordinary measures to avoid govrsquot default
bull September 25 - Speaker Boehner announced that he will resign from his position
bull October 29 - WampM Chairman Paul Ryan (R-WI) is elected Speaker of the House
bull November 2 - President signed budget package (includes debt limit suspension)
bull November 5 - Kevin Brady (R-TX) selected to serve as chairman of WampM
bull November 19 - Treasury announced additional actions to curb corporate inversions
bull December 3 - Congress approved 6-year highway authorization (FAST Act)
bull December 18 - Govrsquot funded via Omnibus Appropriations amp Tax Extenders (PATH Act)
Major Events in 2015
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Congress passed bull Significant Medicare overhaul (Doc Fix) bull Overhaul of domestic surveillance programs (FISA) bull Fast-track trade authority coveted by GOP leadership and President Obama bull 6-year Highway Authorization (3 years of funding in FAST Act) bull 2-year budget deal amp various tax provisions made permanent (PATH Act) bull A bill to strengthen the Miscellaneous Tariff Bill (MTB) process bull Puerto Rico Oversight and Economic Stability Act (PR Default Relief)
Admin amp Congress
cbizmhmwebinar 13
bull July 30 - Treasury announced extraordinary measures to avoid govrsquot default
bull September 25 - Speaker Boehner announced that he will resign from his position
bull October 29 - WampM Chairman Paul Ryan (R-WI) is elected Speaker of the House
bull November 2 - President signed budget package (includes debt limit suspension)
bull November 5 - Kevin Brady (R-TX) selected to serve as chairman of WampM
bull November 19 - Treasury announced additional actions to curb corporate inversions
bull December 3 - Congress approved 6-year highway authorization (FAST Act)
bull December 18 - Govrsquot funded via Omnibus Appropriations amp Tax Extenders (PATH Act)
Major Events in 2015
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Congress passed bull Significant Medicare overhaul (Doc Fix) bull Overhaul of domestic surveillance programs (FISA) bull Fast-track trade authority coveted by GOP leadership and President Obama bull 6-year Highway Authorization (3 years of funding in FAST Act) bull 2-year budget deal amp various tax provisions made permanent (PATH Act) bull A bill to strengthen the Miscellaneous Tariff Bill (MTB) process bull Puerto Rico Oversight and Economic Stability Act (PR Default Relief)
Admin amp Congress
cbizmhmwebinar 13
bull July 30 - Treasury announced extraordinary measures to avoid govrsquot default
bull September 25 - Speaker Boehner announced that he will resign from his position
bull October 29 - WampM Chairman Paul Ryan (R-WI) is elected Speaker of the House
bull November 2 - President signed budget package (includes debt limit suspension)
bull November 5 - Kevin Brady (R-TX) selected to serve as chairman of WampM
bull November 19 - Treasury announced additional actions to curb corporate inversions
bull December 3 - Congress approved 6-year highway authorization (FAST Act)
bull December 18 - Govrsquot funded via Omnibus Appropriations amp Tax Extenders (PATH Act)
Major Events in 2015
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Congress passed bull Significant Medicare overhaul (Doc Fix) bull Overhaul of domestic surveillance programs (FISA) bull Fast-track trade authority coveted by GOP leadership and President Obama bull 6-year Highway Authorization (3 years of funding in FAST Act) bull 2-year budget deal amp various tax provisions made permanent (PATH Act) bull A bill to strengthen the Miscellaneous Tariff Bill (MTB) process bull Puerto Rico Oversight and Economic Stability Act (PR Default Relief)
Admin amp Congress
cbizmhmwebinar 13
bull July 30 - Treasury announced extraordinary measures to avoid govrsquot default
bull September 25 - Speaker Boehner announced that he will resign from his position
bull October 29 - WampM Chairman Paul Ryan (R-WI) is elected Speaker of the House
bull November 2 - President signed budget package (includes debt limit suspension)
bull November 5 - Kevin Brady (R-TX) selected to serve as chairman of WampM
bull November 19 - Treasury announced additional actions to curb corporate inversions
bull December 3 - Congress approved 6-year highway authorization (FAST Act)
bull December 18 - Govrsquot funded via Omnibus Appropriations amp Tax Extenders (PATH Act)
Major Events in 2015
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Congress passed bull Significant Medicare overhaul (Doc Fix) bull Overhaul of domestic surveillance programs (FISA) bull Fast-track trade authority coveted by GOP leadership and President Obama bull 6-year Highway Authorization (3 years of funding in FAST Act) bull 2-year budget deal amp various tax provisions made permanent (PATH Act) bull A bill to strengthen the Miscellaneous Tariff Bill (MTB) process bull Puerto Rico Oversight and Economic Stability Act (PR Default Relief)
Admin amp Congress
cbizmhmwebinar 13
bull July 30 - Treasury announced extraordinary measures to avoid govrsquot default
bull September 25 - Speaker Boehner announced that he will resign from his position
bull October 29 - WampM Chairman Paul Ryan (R-WI) is elected Speaker of the House
bull November 2 - President signed budget package (includes debt limit suspension)
bull November 5 - Kevin Brady (R-TX) selected to serve as chairman of WampM
bull November 19 - Treasury announced additional actions to curb corporate inversions
bull December 3 - Congress approved 6-year highway authorization (FAST Act)
bull December 18 - Govrsquot funded via Omnibus Appropriations amp Tax Extenders (PATH Act)
Major Events in 2015
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 13
bull July 30 - Treasury announced extraordinary measures to avoid govrsquot default
bull September 25 - Speaker Boehner announced that he will resign from his position
bull October 29 - WampM Chairman Paul Ryan (R-WI) is elected Speaker of the House
bull November 2 - President signed budget package (includes debt limit suspension)
bull November 5 - Kevin Brady (R-TX) selected to serve as chairman of WampM
bull November 19 - Treasury announced additional actions to curb corporate inversions
bull December 3 - Congress approved 6-year highway authorization (FAST Act)
bull December 18 - Govrsquot funded via Omnibus Appropriations amp Tax Extenders (PATH Act)
Major Events in 2015
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 14
bull January 12 - President Obamarsquos 8th amp final State of the Union Address
bull January 14 amp 17 - First debates of 2016 for Republicans (6th) and Democrats (4th)
bull February 9 - President released FY17 budget
bull March 1 - Super Tuesday Clinton amp Trump both won 7 of 11 states
bull March 10 - 12th and final GOP debate (Foxrsquos debate canceled Trump and Kasich back out)
bull March 16 - Obama nominated Merrick Garland to fill the Supreme Court (Scalia passed 213)
bull April 4 - Treasury released updated tax reform framework amp issued 385 regulations
bull April 14 - 10th and final Democratic primary debate
Major Events in 2016
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 15
bull May 3 - Indiana GOP Primary solidifies Trump as presumptive GOP presidential nominee
bull May 17 amp 24 - Finance hearings on chairmanrsquos Corporate Integration proposal
bull May 25 - WampM hearing on need for tax reform
bull May 26 - Trump officially surpassed the 1237 delegates required to secure nomination
bull June 7 - Clinton secured the nomination during final Democratic primaries
bull June 24 - House Speaker released tax blueprint (sixth plank of GOP platform)
bull July 15 - Congressional Summer Recess and Major Party Conventions held (OH amp PA)
bull August 2 - Treasury released NPRM Section 2704 on valuation discounts
bull November 8 - Election day
Major Events in 2016 - YTD
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 16
Players
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 17
bull Republicans won their largest majority since 1928 when the party won 270 bull Vacancies ndash Rep Mark Takai (HI) passed away resigned Reps Chaka Fattah (IL) amp Ed Whitfield (KY) bull Republicans have a 4 seat majority in the Senate
2
3
US Congress
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 18
The Chairmen
Kevin Brady (R-TX) Elected 1996 10th term
Secretary Jack Lew Assumed 2013
Asst Secretary Mark Mazur Assumed 2010
The Administration
Orrin Hatch (R-UT) Elected 1977 6th term
Players - Key Decision-Makers
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 19
Current WampM Members
Ranking Member Levin (D-MI) Charlie Rangel (D-NY) Jim McDermott (D-WA) John Lewis (D-GA) Richard Neal (D-MA) Xavier Becerra (D-CA) Lloyd Doggett (D-TX) Mike Thompson (D-CA) John Larson (D-CT) Earl Blumenauer (D-OR) Ron Kind (D-WI) Bill Pascrell (D-NJ) Joseph Crowley (D-NY) Danny Davis (D-IL) Linda Saacutenchez (D-CA)
Dynamics amp Issues in House Ways amp Means Committee Tax Policy
bull Released a ldquoblueprintrdquo for reform in lead up to GOP Convention
bull Held 5 meetings on need for reforms and approving misc bills Health Reform
bull Congress passed a comprehensive package in December 2015 Highway Funding
bull Chairman specifically called out that a HTF fix will not be pursued
Diane Black (R-TN) Tom Reed (R-NY) Todd Young (R-IN) Mike Kelly (R-PA) Jim Renacci (R-OH) George Holding (R-NC) Kristi Noem (R-SD) Pat Meehan (R-PA) Jason Smith (R-MO) Bob Dold (R-IL) Tom Rice (R-SC)
Chairman Kevin Brady (R-TX) Sam Johnson (R-TX) Devin Nunes (R-CA) Pat Tiberi (R-OH) Dave Reichert (R-WA) Charles Boustany (R-LA) Peter Roskam (R-IL) Tom Price (R-GA) Vern Buchanan (R-FL) Adrian Smith (R-NE) Lynn Jenkins (R-KS) Erik Paulsen (R-MN) Kenny Marchant (R-TX)
Two Retiring after 2015 Two Running for Senate One in Competitive Race
House Tax Committee
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 20
Politically Endangered ndash eked out a victory in March primary but he is likely to have a target on his back for years to come Opponent held Brady to 53 of the vote one of the lowest re-election totals in his 18 year career
Seventh Texan as Chairman ndash Won out over Pat Tiberi (OH) in 2015 to become 7th Texan with a gavel
Ch a i r m a n K ev in Br a d y
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 21
Unlikely to Regain Gavel ndash Chairman 2010-2011
At 84 likely to announce retirement next Congress
R a n k in g M em b er S a n d y L ev in
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 22
Senate Flips or WH remains Dem ndash At 82 likely to announce retirement next year Next in line Sen Charles Grassley (IA) previously was a chair and currently chairman of the Judiciary Committee Heir apparent is Sen Mike Crapo (ID)
Ch a i r m a n Or r in H a tc h
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 23
Senate Flips ndash regains gavel lost in 2015 Has a moderate record with construction industry and businesses groups Next in line Sen Charles Schumer will be Democratic Leader in next Congress (an Ex officio member and thus a vacancy will be filled on the committee)
R a n k in g M em b er R on Wyd en
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 24
Tax Reform and Inversions
bull Continue to address inversions comprehensive reform remains unlikely in the short term due to brevity of calendar
bull Working Groups formed in 2015 to propose recommendations (eg 2013 WampM groups)
bull Dividends Received Deduction ndash Integration proposal
Highway Trust Fund bull No plans to address funding shortfall
IRS Oversight
bull Advancing proposals to protect taxpayers from fraud and identity theft
Obamacare
bull CMS ldquo Part B Drug Payment Modelrdquo
Trade amp Trans-Pacific Partnership
bull Administration must submit a description of changes in law
bull Chairman Orrin Hatch (R-UT) dagger bull Chuck Grassley (R-IA) bull Mike Crapo (R-ID) bull Pat Roberts (R-KS) bull Mike Enzi (R-WY) bull John Cornyn (R-TX) bull John Thune (R-SD) bull Richard Burr (R-NC) bull Johnny Isakson (R-GA) bull Rob Portman (R-OH) bull Pat Toomey (R-PA) bull Dan Coats (R-IN) bull Dean Heller (R-NV) dagger bull Tim Scott (R-SC)
bull Ranking Member Ron Wyden (R-OR) bull Chuck Schumer (D-NY) bull Debbie Stabenow (R-MI) dagger bull Maria Cantwell (D-WA) dagger bull Bill Nelson (D-FL) dagger bull Bob Menendez (D-NJ) dagger bull Tom Carper (D-DE) dagger bull Ben Cardin (D-MD) dagger bull Sherrod Brown (D-OH) dagger bull Michael Bennet (D-CO) bull Bob Casey (D-PA) dagger bull Mark Warner (D-VA)
One Retiring after 2015 11 2016 re-election dagger 2017 re-elect
Dynamics amp Issues in Senate Finance Committee
Senate Tax Committee
cbizmhmwebinar 25
Presidential Candidates Clinton amp Trump have set tone for down ballot races
President ObamaAdministration IRS does not intend to put out any ldquosignificantrdquo regulations past Labor Day
Speaker of the House Rep Paul Ryan (WI) is GOP policy standard bearer
Conservative ldquoHouse Pestsrdquo 25 ndash 41 House Republicans seeking to push policy riders on spending bills amp punish IRS
Committee Chairs Bottom-up process is a double edge sword ndash more input and more expectations
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 26
Candidates
cbizmhmwebinar 27
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 27
Summary bull 12 seats are up for election in 2016 bull 3 incumbent Democrats and
2incumbent Republicans are running for re-election
bull There are seven open seats ndash bull 5 formerly Democrat bull 2 formerly Republican
Open Democrat Seat Incumbent Democrat Seeking Re-election Open Republican Seat Incumbent Republican Seeking Re-election
OH
WV VA
PA
NY
ME
NC
SC
GA
TN
KY
IN
MI
WI
MN
IL
LA
TX
OK
ID
NV
OR
WA
CA
AZ NM
CO
WY
MT ND
SD
IA
UT
FL
AR
MO
MS
AL
NE
KS
AK
2016 Gubernatorial Races
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 28
Two Key Republican-Held Gubernatorial Seats Democrats are Targeting
North Carolina
bull Incumbent Gov Pat McCrory (R) has been affected by low polling and backlash from the ldquobathroom billrdquo
bull Both public and private polls show McCroryrsquos opponent Attorney General Roy Cooper (D) holding a narrow lead
bull North Carolina is also a key battleground state in the presidential election where Trump and Clinton will both be highly visible This may cause Trumprsquos negative down-ballot effect to impact McCrory
bull The NC bill regarding transgender bathroom legislation will be a key topic in this race
Indiana
bull Indiana polling shows former state House Speaker John Gregg (D) running relatively even with Lt Gov Eric Holcomb (R)
bull Holcomb was picked late in the election cycle because incumbent Mike Pence was tapped to run as Donald Trumprsquos vice presidential candidate
bull Pence leaves the office amid criticism from equal rights activists for his controversial religious liberty bill and a low approval rating
bull Democrats will likely try to associate Holcomb as much as possible with the Pence administration
2016 Gubernatorial Races
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 29
Two Key Democrat-Held Gubernatorial Seats Republicans are Targeting
Missouri
bull Gov Jay Nixon (D) is retiring from his position and the GOP sees his seat as the primary pick-up opportunity among gubernatorial races
bull Polls show a tight race between Attorney General Chris Koster (D) and Eric Grietens (R) a veteran of the wars in Iraq and Afganistan
bull Koster is a Republican-turned-Democrat campaigning with $11 million in the bank
bull Grietens is a newcomer to politics but beat three more experienced candidates in his run for the Republican nomination
West Virginia
bull West Virginia was initially a likely pick-up opportunity for the GOP but state Senate President Bill Colersquos (R) chances have been hurt by a fight over state budget problems
bull Meanwhile billionaire Jim Justice (D) has a slight lead in the polls
bull Republicans seem to be moving their focus to other races as Colersquos outlook looks grim in this election
2016 Gubernatorial Races
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 30
Dynamics of the 2016 Senate
bull Republicans took control in 2014 and have more seats at risk from the 2010 class
bull Senate Democrats are defending 10 seats vs 24 for Republicans
bull 7 Republican Senate seats and only 2 Democratic Seats in play
bull Democrats need to net 4 (w VP Kaine) or 5 seats (w VP Pence) to retake the Senate
bull During Presidential years demographics of ldquolikely votersrdquo heavily favors Democrats
bull The opposite is true during mid-term elections when Republicans tend to be favored
bull 2018 fares better for GOP Senate Races ndash when Dems have 23 seats up vs 10 GOP
2016 Senate Races
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 31
Since the 1970s the share of voters who split their tickets mdashsupporting one party for president and the other in Senate racesmdash has steadily declined to 23 on average during the 1980s 16 across Clintonrsquos two races 13 in 2008 and just 10 in 2012 The goal is no longer to identify and persuade those in the squishy middle of the ideological spectrum to split their tickets Instead campaigns try to find sporadic voters who if they could be persuaded to go to the polls would vote straight down the ticket ndash GET OUT THE VOTE Overall just 8 of voters in the 34 states with Senate races say they will vote for either Clinton or Trump for president and a Senate candidate from the opposing party 4 will vote for a Democrat or Republican for president and a House candidate from other party
Source Pew Research Center Survey 927- 1010 National Election Studies analyzed by Emory Univ Prof Abramowitz
Straight vs Split Tickets
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 32
Solid Democrat Likely Democrat Lean Democrat Toss Up Lean Republican Likely Republican Solid Republican No Senate Race
NY
SC
KY
LA
OK
ID
OR
WA
ND
SD
UT
AR
AL
KS
HI
VT
MD
CT
GA
CA
IA
AK
MI
MN
TX
NM
WY
MT
NE
WV VA
TN
MS
ME
RI
MA
NJ
DE OH
PA
IN
WI
IL NV
FL
NH
NC
MO
AZ
CO
Senate Races Map
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 33
Top Races to Watch
Republican running for reelection
Toss Up Race
Democrat running for reelection
Likely to switch to Democrat seat
OH NV
CO
FL
NH
FL Sen Marco Rubio announced re-election before June filing deadline being attacked on voting record Rep Patrick Murphy is hurting from resume embellishments as CPA amp police record +36+47 LEAN GOP
PA Sen Pat Toomey (R) may be too conservative in a presidential year but has worked to moderate his record Dems got a boost when Fmr chief of staff Katie McGinty (D) won primary Turnout in Philadelphia area is deciding factor +67+04 TILT DEM
WI Sen Ron Johnson (R) is a relatively unknown businessman in his home state and may be too conservative for a presidential-year Dems are hoping that Fmr Sen Russ Feingold (D) has a strong showing LEAN DEM (FLIP)
IL Sen Mark Kirk (R) won a close in 2010 and voted against defunding Planned Parenthood and in favor of gun-sale restriction Rep Tammy Duckworth is a combat-wounded helicopter pilot and former VA official under Obama LIKELY DEM (FLIP)
AZ
SAFE LIKELY LEAN TILT
TOSS UP
MO
NC
WI
IL
PA
IN
IN OPEN Fmr Sen Evan Bayh (D) started with over $9m in warchest he left the Senate with in 2010 Faces formidable Rep Todd Young (R) who cleared a primary amp VP candidate Pence has high favs +45+35 TILT DEM
OH Sen Rob Portman (R) has put 15 points of daylight between himself and Fmr Gov Ted Strickland (D) In 1988 Ohio went for Bush and Sen Howard Metzenbaum (D) +05+155 LEAN GOP
WI
IL
PA
IN
Source realclearpolitics Cook Political Report
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 34
Top Races to Watch
OH NV
CO
NH
NV Open Rep Joe Heck (R) is a trauma surgeon and General with low name recognition up against Fmr AG Catherine Cortez Masto will go head-to-head - but Trump is faltering +25+20 PURE TOSS UP
CO Sen Michael Bennet (D) - voters nominated hard-line conservative El Paso Cty Comm Darryl Glenn in June 28 primary LIKELY DEM
AZ Sen John McCain (R) faced some headwinds with Trump at top against Democrat Rep Ann Kirkpatrick Top 3 issues in race are related to healthcare +07+160 LIKELY GOP AZ
MO
NC
MO Sen Roy Blunt (R) is a seasoned lawmaker facing a rising star in Sec of State Jason Kander (D) Gubernatorial race may have implications Atty Gen Chris Koster (D) vs Fmr SEAL Eric Greitens (R) +80+23 TILT GOP
WI
IL
PA
IN
NH Sen Kelly Ayotte (R) has high favorables but running in a blue state in a presidential year popular 2x Gov Maggie Hassan (D) Opioid epidemic is 1 issue in the campaign +43+23 PURE TOSS UP
NC Sen Richard Burr (R) is in a tighter than expected race with fmr ACLU amp Fmr St Rep Deborah Ross (D) Burr didnrsquot start campaigning until Oct7th and Gubernatorial will have an affect Burr first to win re-elect since Sen Helm in 1996 ndash NC has a penchant for booting incumbents Broyhill Sanford Faircloth Edwards Dole Hagan Tillis +33+18 TILT GOP
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Democrats have 23 seats up with 10 competitive races (FL IN MO NM ND OH PA VA WV WI) Republicans expected to have 8 seats up in fairly safe territory
2018 Senate Races
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 36
177 202 6 13 6 13 18
Dynamics of the 2016 House To re-capture the House majority they lost in the 2010 election Dems would need to hold all Dem-leaning seats and win 30 toss up and Republican-leaning seats to win the majority
Source Cook Political Report
2016 House Races
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
cbizmhmwebinar 37
Lean Democrat
Toss-Up
Lean Republican
15 3
0 13
3 3
OPEN SEAT (AZ-01) Kirkpatrick R+4 OPEN SEAT (FL-18) Murphy R+3
NE-02 Brad Ashford R+4
CA-07 Ami Bera EVEN CA-24 OPEN (Capps) D+4 MN-08 Rick Nolan D+1
FL-13 David Jolly D+3 NV-04 Cresent Hardy D+4
NH-01 Rep Frank Guinta R+1
CA-25 Rep Steve Knight R+3 CA-49 Rep Darrell Issa R+4
CO-06 Rep Mike Coffman D+1 FL-7 Rep Mica (FL-07)
FL-26 Rep Carlos Curbelo EVEN IL-10 Rep Robert Dold D+8
IA-01 Rod Blum D+5 ME-02 Rep Bruce Poliquin D+2
MN-02 OPEN (Kline) R+2 NV-03 OPEN (Heck) EVEN
NJ-05 Rep Garrett R+4 NY-19 OPEN (Gibson) D+1 NY-22 OPEN (Hanna) R+3
PA-08 OPEN (Fitzpatrick) R+1 TX-23 Rep Will Hurd R+3
CA-10 Denham CA-21 Valadao D+2
IN-09 OPEN (Young) IA-03 Rep David Young
KS-03 Yoder OPEN SEAT (MI-01) Benishek
MI-07 Walberg
MN-03 Paulsen NY-01 Lee Zeldin R +2
NY-24 Rep John Katko D+5 UT-04 Mia Love R+16
ldquoDem Mormonsrdquo VA-10 Comstock
WI-08 OPEN (Ribble) R+2
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Source Cook Political Report
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
Chart1
Democrats
Republicans
-3
4
-3
16
0
14
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
Lean Democrat
Lean Democrat
Toss-Up
Toss-Up
Lean Republican
Lean Republican
Sheet1
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
Lean Democrat
Toss-Up
Lean Republican
Democrats
-3
-3
0
Republicans
4
16
14
cbizmhmwebinar 38
Source Nielsen
0
20
40
60
80
100
120
LOYALISTS PERSUADABLES ANTAGONISTS
85 96
22
28 15
(members)
At Risk
Safe Seat
NEXT CONGRESS LESS FRIENDLY Votes with House Leadership
Loyalists at least 9 of 11 Persuables 5-8 times Antagonists 4 of 11 or fewer
Sour
ce ldquo
At R
iskrdquo
base
d on
Sab
ato
Crys
tal B
all r
atin
gs (n
ot ldquo
safe
rdquo) v
otes
with
Lea
ders
hip
com
pile
d by
Fisc
alN
ote
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
cbizmhmwebinar 39
POTUS
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
cbizmhmwebinar 40
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
cbizmhmwebinar 41
First female nominee of a major party
2nd presidential run following 2008
In the public eye since the late rsquo70s
Former First Lady
Former US Senator from New York
Former US Secretary of State
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
cbizmhmwebinar 42
Businessman amp TV personality
Chairman of Trump Organization
Explored 2008 run as Reform Party candidate
First candidacy as a Republican
Defeated 16 Republicans to secure nomination
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
cbizmhmwebinar 43
bull Ticket became the first ticket of any party to consist of two governors since the 1948 election cycle
bull Platform is socially liberal and fiscally conservative a political ideology that currently resonates well in the Mountain West and the Northeast
bull Nationally he has hovered around 7
Name Gary Johnson
Party Libertarian
Last Political Position Held
Governor of New Mexico (1995-2003)
Vice President
William Weld Former Gov of Massachusetts
Name Jill Stein
Party Green
Last Political Position Held
Lexington MA Town Meeting Member (1995-2011)
Vice President
scholar and activist Ajamu Baraka
Committed to running on a platform that very much resembles Bernie Sandersrsquo policy goals but Steinrsquos approach has been called slightly ldquomore pacifistrdquo and ldquomore ambitiousrdquo Polling nationally around 5 but has failed to show a promising regional appeal from which she could make an impact on the electoral college vote
Major 3rd Party Candidates
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
cbizmhmwebinar 44
Do You Like Them
The match-up between Clinton and Trump is a race between the two most disliked presidential nominees in at least 30 years
523 of voters have an unfavorable opinion of Clinton
609 of voters have an unfavorable opinion of Trump
Voters view the election as ldquoa choice between the lesser of two evilsrdquo
Source RealClearPolitics Average 928 ndash 1016
Favorable Unfavorable Spread 432 523 -91
Favorable Unfavorable Spread 345 609 -264
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
cbizmhmwebinar 45
Source Quinnipiac University Poll August 2015
Use One Word
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
cbizmhmwebinar 46
Use One Word
Source Quinnipiac University Poll August 2015
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
cbizmhmwebinar 47
48 42 CLINTON TRUMP
VS
GOP Convention
Debates
101
3 ndash
102
2 |
Real
Clea
rPol
itics
Ave
rage
| G
ener
al E
lect
ion
Presidential Polls
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
cbizmhmwebinar 48
Source Nielsen
0
20
40
60
80
100
120
140
Romney v Obama
Bush v Clinton v Perot
Carter v Reagan
Trump v Clinton 1st
Trump v Clinton 3rd
Katy Perry Halftime
Show
MASH Finale
671 699 806 84
716
1185 125
(in millions)
1992 1980 2012 2016 2016 2015 1983
Debate Viewership
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
cbizmhmwebinar 49
Debate Viewers
Eligible Voters
Views Foreshadow Turnout
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
Obama
Romney
Column2
Column1
332
206
To update the chart enter data into this table The data is automatically saved in the chart
332
206
Obama
McCain
Column2
Column1
365
173
To update the chart enter data into this table The data is automatically saved in the chart
365
173
cbizmhmwebinar 50
200 million now registered to vote for 1st time in US history Milestone is due to aggressive voter registration efforts and a symptom of the fast-growing and demographically shifting electorate 426 of new voters lean Democratic while only 29 lean Republican Only 1463 million were registered as recently as 2008 mdash a remarkable 33 surge The last time a Clinton ballot 20 years ago the electorate was 1276 million
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
ldquoWere a serious debtor nation And we have a country that needs new roads new tunnels new bridges new airports new schools new hospitalsrdquo - Trump
Undercard ndash Running Mate Debate
Pence style outshines Kaine substance on Trump
Round 2 ndash Tear down the Town Hall ldquoLike watching mom amp dad fightrdquohellip ldquolock her uprdquo
Round 3 ndash Main Event in Las Vegas
Both missed opportunities to sway undecided voters
Debates to Date
cbizmhmwebinar 52
OH 20
WV 5
VA 13
PA 21
NY 31
ME 4
NC 15
SC 8
GA 15
TN 11
KY 8
IN 11
MI 17
WI 10
MN 10
IL 21
LA 9
TX 34
OK 7
ID 4
NV 5
OR 7
WA
CA 55
AZ 10 NM
5
CO 9
WY 3
MT 3 ND
3
SD 3
IA 7
UT 5
FL 27
AR 6
MO 11
MS 6
AL 9
NE 4
KS 6
AK 3
11
HI 4
NH 4
VT 3
1
Barack Obama (D) Running Mate Joe Biden Popular Vote 529 States Carried 28 + DC
John McCain (R) Running Mate Sarah Palin Popular Vote 457 States Carried 22
2008 Electoral College Map
Chart1
Obama
McCain
Sheet1
cbizmhmwebinar 53
OH 18
WV 5 VA
13
PA 20
NY 29
ME 4
NC 15
SC 9
GA 16
TN 11
KY 8
IN 11
MI 16
WI 10
MN 10
IL 20
LA 8
TX 38
OK 7
ID 6
NV 6
OR 7
WA
CA 55
AZ 11 NM
5
CO 9
WY 3
MT 3
ND 3
SD 3
IA 6
UT 6
FL 29
AR 6
MO 10
MS 6
AL 9
NE 5
KS 6
AK 3
12
HI 4
NH 4
VT 3
Barack Obama (D) Running Mate Joe Biden Popular Vote 511 States Carried 26 + DC
Mitt Romney (R) Running Mate Paul Ryan Popular Vote 472 States Carried 24
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
97 Possible Combinations If Maines 2nd or Nebraska 2nd District goes Blue
If Johnson Wins NM ndash NV amp NH could interchange or put someone over the top
269 or 267 CLINTON
Electoral Vote Ties
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 58
4 New Potential Battleground States
Utah has been one of the most reliably red states in the US voting Republican in each of the past 12 presidential elections (lsquo64) A new poll has Clinton and Trump tied with 36 Independent Evan McMullin trails with 22 Mormons could play a role in turning Utah blue In the GOP primary Trump came in last place and over 50 points behind Cruz Romney Huntsman Gov Herbert Rep Chaffetz Sen Lee and Rep Chris Stewart have been vocal against Trump
Arizona is home to the 5th-highest number of eligible Hispanic voters of all states despite less than half the Hispanic population eligible to vote due to lack of voter registrationcitizenship Hispanic voter registration on the rise and 89 of Hispanics view Trump unfavorably A recent poll in the state showed Trump with only a 1-point lead Been red since 1964 ndash Clinton won in 1996
Georgia Clinton is looking to replicate her husbandrsquos success Bill Clinton won the state in 1992 Despite Republicans holding all statewide positions and winning the last five presidential elections here the four major polls from May have Trump leading by less than 5 points (his largest lead was 9 and his smallest was 1) Clinton polls much much better among black Georgians and 81 of the states growth between 2000-2010 came from minorities
Michigan has voted blue in the past 6 elections but Trumprsquos populist rhetoric and aggressive push against trade deals could be a surprise but unlikely as recent polls have Clinton up by double digits 114 points last week
2016 Election May See New Swing States
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 59
Electors cast their votes on First Monday after the second Wednesday in December at state capitols (Dec 14)
If no candidate receives 270 Electoral votes the House elects the President from the 3 candidates who received the most Electoral votes Each state delegation has one vote Each Senator would cast one vote for Vice President from the 2 candidates with the most Electoral votes
If the House fails to elect a President by Inauguration Day (Jan 20) the Vice-President Elect serves as acting President until the deadlock is resolved in the House (12th Amendment) The new Congress sworn in on Jan 3 2017 would be those that break the tie (20th Amendment moved the start of the new session of Congress from March) The GOP will likely retain at least 30 state delegations in the 115th Congress (2017) ndash thus select Donald Trump as POTUS
If the Senate goes Democratic then Sen Tim Kaine would become president (could vote for himself) If Republicans maintain control then Gov Mike Pence will be the 45th president If the Senate also deadlocksmdashthe unlikeliest of unlikely scenariosmdashthen according to the Presidential Succession Act of 1947 the presidency would go to Speaker of the House Paul Ryan (R-WI)
Electoral College Votes
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 60
Historically voters are likely to side with a Republican after eight years under a Democrat
7 of 9 elections voters switched party when a candidate (or successor) won two prior elections
Year President Party Party Election Result
1960 Eisenhower Republican Democrats take White House
1968 KennedyJohnson Democrat Republicans take White House
1976 NixonFord Republican Democrats take White House
1988 Reagan Republican Republicans keep White House
2000 Clinton Democrat Republicans take White House (Gore wins popular vote)
2008 G W Bush Republican Democrats take White House
2016 Obama Democrat ClintonTrump
Modern History Predicts a Trump Presidency
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 61
Moodys Analytics Election Model (Mark Zandi) has correctly predicted each presidential election since 1980 by looking at voting trends and direction of key economic indicators (unemployment gas prices wages) The 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes He won 26 states and 332 electoral votes
Electoral College forecast at 332 to 206 in favor of Democrats (270 needed to win) With just weeks to election day the chances of an economic forecast error distorting the results are fading Yet the unusual nature of this election cycle places moderate risk in the model outcome
The rhetoric surrounding the presidential election is turning darker but it hasnrsquot meaningfully impacted the economy at least not yet Consumer and business confidence remains sturdy and though sentiment isnrsquot as strong as in previous expansions Financial markets are calm even buoyant as stock prices hover near record highs and credit spreads are narrow Commodity prices have firmed in recent
Economic Indicators Pick Hillary
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 62
Jim Ellis has been a consultant to the three national Republican Party organizations NFIB and various national conservative groups He consults for AGC of America and is a columnist for The Advocate
Electoral College forecast at 272 to 266 in favor of Democrats (270 needed to win)
Ellis Insight Predicts Hillary
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 63
1 Party Mandate (mid-terms) 2 Incumbency Contest (HRC won) 3 Incumbency (re-elect) 4 No Third Party (Johnson gets 6) 5 Short-term Economy (no recession) 6 Long-term Economy (GDP positive) 7 Policy Change (no 2nd Term item)
American University History Prof Allan J Lichtman has predicted the outcome of since 1984 Theory is not based solely on Candidates Issues Debates Ads
Performance of Party Holding the White House = 13 Key Factors that 6 or more need to be False to lose WH
8 No Social Unrest (sustained) 9 Scandal (incumbent not marred) 10 Foreign Military Failure (invasion) 11 ForeignMilitary Success 12 Incumbent Charisma (not FDR) 13 Challenger No Charisma (national hero)
ldquoDonald Trump may well break patterns of history that have held since 1860rdquo
2016 ldquoLike Predicting An Earthquakerdquo
Source Washington Post Interview September 23 2016
Academic Predicts Trump Tenure
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 64
Source fivethirtyeightcom Bovada predictitcom
Candidate Win Presidency
Hillary Clinton -650
Donald Trump +400
Candidate Win Presidency
Hillary Clinton 81 cent
Donald Trump 21 cent
ldquoVegasrdquo Odds
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 65
In American political jargon an October surprise is a news event deliberately created or timed (or sometimes occurring spontaneously aka Black Swan) to influence the outcome of an election particularly one for the US presidency
Examples FBIDOJ investigating email server Pneumonia and health scares ISILIrandomestic terrorist event Trump tax returns or leaked audio WikiLeaks bombshell
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 66
Clinton Transition Chairman Ken Salazar former Interior secretary Tom Donilon Obamarsquos former national security adviser former Michigan Gov Jennifer Granholm Neera Tanden president of the Center for American Progress Rev Leah Daughtry a veteran Democratic operative Maggie Williams a longtime Clinton ally and director of Harvardrsquos Institute of Politics Clinton Treasury Sec Sheryl Sandberg Facebook COO amp served as chief of staff for Treasury Secretary Larry Summers Trump Transition Chairman Chris Christie New Jersey governor Bill Palatucci Christiersquos former law partner and longtime political ally Rich Bagger Christiersquos longtime political ally and former chief of staff Ed Meese former attorney general and longtime aide to President Ronald Reagan Eric Ueland veteran Republican Capitol Hill aide and top staffer on the Senate Budget Committee Trump Treasury Sec Steve Mnuchin Wall Street banker amp Trumprsquos national finance chairman
Transition amp Treasury
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 67
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 68
Creates a 4 ldquosurchargerdquo on taxpayers with AGI above $5 million ldquoBuffett Rulerdquo establishes 30 minimum tax on taxpayers with AGI above $1 million Limit itemized deductions and certain tax expenditures to 28 (ie employer-
provided health insurance municipal bond interest and above-the-line contributions to retirement accounts)
Adjusts the schedule for long-term capital gains by raising the top rate on medium-term capital gains to between 396 (lt1yr) and 20 percent (gt6 yrs)
Limits the tax benefit of like-kind exchanges (gains deferred to $1 million per year) Tax carried interest at ordinary income rates instead of cap gains and dividends rates Reduces the estate tax exemption amount from the current $545 million ($109
million for couples) to $35 million ($7 million for couples)and enacts progressive rates on estates with a top rate of 65 percent on estates worth $1 billion ($500 million for singles)
Eliminate the ldquostep-up basisrdquo of capital gains at death treating like a sale of a stock and thus taxing capital gains with exemptions for certain businesses
Clinton Tax Plan
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 69
Establishes a ldquofinancial riskrdquo fee on large banks Expand Section 179 Expand Cash Accounting Quadruple Startup Deduction
ExpandSimplify ACA credit Reforms the 38 Net Investment Income Tax (NIIT) and self-employment taxes
(SECA) by broadening tax base to include more business income Eliminates fossil fuel tax expenditures Enacts business tax reform in order to fund new infrastructure spending although
details have not been specified (repatriation of $26T - $275 billion on infrastructure over five years $25 billion of which would go toward establishing an infrastructure bank)
Clinton Tax Plan
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 70
Consolidates current 7 tax brackets into 3 with rates on ordinary income of 12 percent 25 percent and 33 percent
Adapts current rates for qualified capital gains and dividends to 3 new brackets Eliminates the Net Investment Income Tax Increases the standard deduction from $6300 to $15000 for singles and from
$12600 to $30000 for married couples filing jointly Eliminates the personal exemption and introduces other childcare-related tax
provisions Caps itemized deductions at $100000 for single filers and $200000 for married
couples filing jointly Taxes carried interest as ordinary income Eliminates the individual amp corporate alternative minimum tax Eliminates estate and gift taxes but disallows step-up in basis for estates over $10m
Trump Tax Plan
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 71
The revised plan would reduce the top individual income tax rate to 33 percent reduce the corporate rate to 15 percent and allow owners of pass-through businesses to elect to be taxed at flat rate of 15 rather than the individual tax rates
The available documents describing the revised plan do not specify how the size of pass-through businesses (or business income) would be determined If the owner of one or more pass-through entities received at least $500000 in total pass-through business income under current law actual distributions were assumed to be taxed in the same manner as a dividend under the plan Actual distributions for all other pass-through businesses are assumed untaxed
Eliminates the corporate alternative minimum tax Allows firms engaged in manufacturing in the US to choose between the full
expensing of capital investment and the deductibility of interest paid Eliminates the domestic production activities deduction (section 199) and all other
business credits except for the research and development credit Enacts a deemed repatriation of currently deferred foreign profits at a tax rate of
10
Trump Tax Plan
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 72
Source Tax Foundation Analysis
Tax Plans Compared
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 73
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 74
House in session Senate in session Both chambers in session
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30
October November December
Nov 8 Election Day Nov 14 Congress Returns from 4 Week Recess
November Congress likely debate on TPP trade agreement Dec 16 Congress ends 2016 session
House
16 Days Left in Session
Senate
20 Days Left in Session
4 Weeks Left in Session
Timetable - 2016 Congressional Calendar
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 75
2012
American Taxpayer Relief Act made a series of Bush tax cuts permanent but increased tax rates on dividends estate taxes and payroll taxes bill extended certain corporate tax breaks and certain tax breaks for lower-income families
February 2014
Tax Reform Act of 2014 comprehensive draft for reform which was released by Dave Camp lowered corporate and individual rates and simplified the tax code but faced wide opposition and was only ceremonially put to the floor at the end of December of 2014
September 2014
Treasury Actions on Inversion Secretary Lew put forward a series of measures designed to reduce benefits of tax inversions including blocking inverted companies from transferring assets to parent companies and accessing foreign earnings
January 2015
Senate Finance Committee Tax Working Groups Finance committee created a series of lsquoworking groupsrsquo on issue areas to create proposals for tax reform in the 114th Congress
Summer 2015
Tax Committee Action Finance Working Groups missed a May deadline and have until the end of June to come up with reform recommendations
WampM working on a HTF package
International provisions are epicenter of debate to keep domestic competitiveness
Fall 2015
House Leadership Changes Kevin Brady (R-TX) selected to serve as chairman of WampM
March 2016
Tax Task Force Action WampM Chairman Brady convenes Task Force on Tax Reform ldquoIdea Forumrdquo
March ndash May 2016
WampM Holds Tax Hearings Chairman Boustany holds multiple hearings for rank-and-file members to offer plans to alter tax code
April 2016
Congressional Action House Speaker communicates tax plank for conservatives ndash Blueprint on Tax Reform House amp Senate chairs release white papers and messaging bills
Summer 2016
Treasury Actions Announced Releases updated business tax reform framework amp more regulations to limit the number of corporate tax inversions (Sec 385) Protecting Americans from Tax Hikes
Congress passes Omnibus Appropriations amp Tax Extenders
Timeline of Key Recent Federal Actions on Tax Reform
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 76
ndash Comprehensive Tax Reform ndash promote tax rate parity for all business types
ndash Conventional thinking ndash comprehensive reform will follow the 2016 elections ndash and at a minimum committee reports will serve as place markers as the tax reform debate continues in the next Congress with a new Administration
ndash Defend against adverse policy changes in the tax code for the remaining legislative weeks
ndash Vehicles for tax policy riders - discussions of attaching a tax title to any bills set for passage
ndash Tax Extenders ndash retroactively renewing expired provisions while abhorred is the new normal for extending expired provisions
ndash one (1) industry tax priority expires in 2016 amp four (4) in 2019
Areas of Focus
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 77
Construction Industry Legislative Priorities ndash Extend the energy efficient commercial buildings deduction under Section 179D
(Expires this year) ndash Promote Private Activity Bonds for Social Infrastructure (new $5b allocation for
public buildings - HR 5361S 3177 the Public Buildings Renewal Act of 2016 ndash Reintroduction of American Job Builders Tax Reform Act (increase gross receipts
threshold for determining whether a small contractor may adopt an accounting method for reporting income from a construction contract other than the percentage of completion method)
Area of Focus
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 78
Section 385 ndash Debt Recharacterization Rulemaking is complex and expands well beyond the Administrationrsquos attempt to restrict corporate ldquoinversionsrdquo and eliminate the tax consequences of ldquoearnings strippingrdquo Applies to larger companies (publicly traded or above $50 million in annual revenue or $100 million in total assets) and it sets a scary precedent Allows IRS wide discretion to characterize common business practices (like loans between related companies) as tax avoidance techniques and unilaterally recharacterize company debt as equity for federal tax purposes This recharacterization will likely force S-corps to reincorporate as C-corps or consolidate related S-corps It also imposes significant IRS reporting requirements meant to uncover offshore tax avoidance techniques even on companies that have no offshore holdings
Treasury Regulations
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 79
Section 2704 ndash Valuation Discounts Proposed rule relating to the valuation of interests in businesses for estate gift and generation-skipping transfer (GST) tax purposes and the treatment of lapsing rights and restrictions on liquidation in determining the value of transferred interests under Section 2704 Treasury officials outlined in Priority Guidance in 2015 and they appear to be consistent with the Obama budget proposal offered in 2012 that was estimated to raise $18 billion over ten years The bottom line is that these broad regulations will force more companies to contend with complicated and costly estate taxes Broad new rule when coupled with the pending 385 regulations will limit the ability of companies to invest and create jobs AGC is preparing to submit comments before the November 2 deadline A public hearing on the proposed regulations has been scheduled for December 1
Treasury Regulations
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 80
Section 199 ndash Substantial Renovation Issued August 2015 regulations involving the domestic production activities deduction (DPAD) under Section 199 addressing the definition of ldquosubstantial renovationrdquo in Prop Treas Reg sect1199-3(m)(5) which indicates that activities constitute substantial renovation where they would be a capitalizable improvement under Section 263(a) Over the years proposed and temporary regulations originally have intended to address a number of legislative changes to Section 199 However the IRS determined that it also needed to address a variety of other issues that have arisen over the years at IRS exam Appeals and in the courts The proposed definition of substantial renovation would lead to significant controversies between taxpayers and the IRS since it does not comport with the broad rules for determining construction activities and would not be administrable since it would require construction firms to step into the shoes of property owners and determine whether costs are capitalizable under Section 263(a) where the EampC taxpayers lack the information to make such determinations
Treasury Regulations
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 81
Content
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 82
Senator Orrin Hatch (R-UT) (Corp Integration thru Dividends Received Deduction) bull Allowing corporations to deduct the dividends they pay to shareholders it equalizes the treatment of debt and
equity financed investment it lowers the cost of capital and moves towards treating all business forms equally bull Some capital income could escape taxation completely with a dividend deduction system (no tax when tax-
exempt organization receive the dividend) bull A dividend deduction doesnrsquot address the high entity level tax that will remain at 35 percent Senator Ron Wyden (D-OR) (Depreciation Schedules) bull Replace the current MACRS and ADS system with the Accelerated Mass Asset Cost Recovery and Reinvestment
System (A-MACRRS) A-MACRRS would reduce the depreciation schedules to six asset ldquopoolsrdquo Assets would be assigned to each pool based on their current MACRS property class assignment Taxpayers would have to calculate depreciation EampP and AMT adjustments only once on a unified schedule
bull For firms that manage large bundles of assets this pooling system provides a simpler alternative to using the
current ldquomass asset accountsrdquo for depreciation which impose an additional tax on the disposition of assets
Senate Tax Plans
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 83
5 major congressional tax plans
bull The Tax Reform Act of 2014 introduced by former Congressman Dave Camp (R-MI)
bull The Progressive Consumption Tax Act introduced by Senator Ben Cardin (D-MD)
bull The American Business Competitiveness Act introduced by Congressman Devin Nunes (R-CA)
bull The ldquoA Better Wayrdquo Tax Reform Blueprint issued by Speaker Paul Ryan (R-WI)
bull The ldquoSimplifying Americarsquos Tax Systemrdquo Plan issued by Congressman Jim Renacci (R-OH)
These tax plans will likely play a large role in framing the tax policy debate in 2017
House Tax Plans
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 84
June 2016 - House GOP Taskforce on Tax Reform
bull Lower the corporate tax rate from 35 to 20 percent and ldquoterritorialrdquo system bull Allow individuals to deduct 50 of dividends capital gains and interest
received from stocks and mutual funds (6 125 165) bull 3 individual tax brackets 12 25 and 33 bull Eliminates all itemized deductions except the MID and charitable contribution
deduction bull 25 rate for small businesses and pass-through income bull Provide full and immediate business expensing bull Eliminates the interest deduction bull A move toward a consumption-based tax system bull Repatriation of foreign earnings at 875 bull Eliminates the Section 199 deduction bull Retain a RampD credit similar to form passed under PATH Act bull Blueprint does not include a value-added tax (VAT) a sales tax or any other
tax as an addition to the fundamental reforms bull Eliminates AMT amp Estate taxes
GOP Agenda for 2017
cbizmhmwebinar 85
cbizmhmwebinar 86
Laws Enacted Action but not Enactment Debate Beginning No Action Yet TRIA PACE Delay of HIT
Cadillac Med Device taxes (ACA Changes)
Tax Extenders Highway Reauth VA Construction Procurement
Reform FAA Authorization
bull PLAs bull Health Care bull Workforce bull WOTUS bull Civilian BRAC bull Regulatory Comments bull Block Unilateral
Policymaking bull Contractor Due Process bull Oversight of Regulations bull Water Resources
Development Act bull PAC Prior Approval
bull Highway Trust Fund
bull Multiemployer Pensions
bull Safety bull Immigration
bull NLRBDOLCard Check bull Keep Debt from Harming
Construction Climate bull Tax Reform and Entitlement
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 87
bull Criminal Justice Reform bull Defense AppropriationsNDAA bull Comprehensive Energy Bill bull LGBT Rightsanti-discrimination amendment bull Mental Health Reform bull Opioid Epidemic bull Puerto Rico Debt Restructuring bull TPPTrade agenda bull Highway Reauthorization bull Health Care ReformReplace bull FAA ReauthorizationExtension bull WOTUS resolution not signed in 2015
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
Recent Publications bull Highlights from the IRS Tax-Exempt and Government Entities Division 2017 Work
Plan
bull Understanding the Leasing Standard Sale and Leaseback and Other Types of Lease Transactions
bull Write-Downs and Other Impairment Considerations for Oil and Gas Companies
cbizmhmwebinar 92
Connect with Us
linkedincomcompany mayer-hoffman-mccann-pc
mhm_pc
youtubecom mayerhoffmanmccann
slidesharenetmhmpc
linkedincomcompany cbiz-mhm-llc
cbizmhm
youtubecom BizTipsVideos
slidesharenetCBIZInc
MHM CBIZ
cbizmhmwebinar 93
THANK YOU CBIZ amp Mayer Hoffman McCann PC cbizmhmwebinarscbizcom
Slide Number 1
About CBIZ amp MHM
About AGC of America
About ABC
Before We Get Startedhellip
CPE Credit
Disclaimer
Presenter ndash Brian Lenihan
Presenter ndash Chris Singerling
Moderators
Agenda
Admin amp Congress
Major Events in 2015
Major Events in 2016
Major Events in 2016 - YTD
Players
US Congress
Players - Key Decision-Makers
House Tax Committee
Slide Number 20
Slide Number 21
Slide Number 22
Slide Number 23
Senate Tax Committee
Who is in Driverrsquos Seat
Candidates
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Gubernatorial Races
2016 Senate Races
Straight vs Split Tickets
Senate Races Map
Top Races to Watch
Top Races to Watch
2018 Senate Races
2016 House Races
GOP Has More at Stake in 2016 But Arenrsquot Expected to See Big Losses
Slide Number 38
POTUS
Slide Number 40
Slide Number 41
Slide Number 42
Major 3rd Party Candidates
Do You Like Them
Use One Word
Use One Word
Presidential Polls
Debate Viewership
Views Foreshadow Turnout
Most Voters in History
Debates to Date
2008 Electoral College Map
2012 Electoral College Map
Prior to 1st Debate
Prior to Webinar
Florida Matters
Electoral Vote Ties
2016 Election May See New Swing States
Electoral College Votes
Modern History Predicts a Trump Presidency
Economic Indicators Pick Hillary
Ellis Insight Predicts Hillary
Academic Predicts Trump Tenure
ldquoVegasrdquo Odds
Slide Number 65
Transition amp Treasury
Slide Number 67
Clinton Tax Plan
Clinton Tax Plan
Trump Tax Plan
Trump Tax Plan
Tax Plans Compared
Slide Number 73
Timetable - 2016 Congressional Calendar
Timeline of Key Recent Federal Actions on Tax Reform
Areas of Focus
Area of Focus
Treasury Regulations
Treasury Regulations
Treasury Regulations
Content
Senate Tax Plans
House Tax Plans
GOP Agenda for 2017
Slide Number 85
Progress on Construction Agenda
Congressional Agenda
Slide Number 88
CONSTRUCTIONVOTESCOM
Slide Number 90
If You Enjoyed This Webinarhellip
Connect with Us
Slide Number 93
cbizmhmwebinar 88
Whether providing consultation to key legislative decision-makers regarding ongoing legislation and regulatory language or helping construction firms to interpret Federal laws tax rules and GAAP standards participants in the Committee play a critical role in guiding firms and shaping the industry
Issues identified and addressed by AGCrsquos FIC have wide-ranging ramifications for the industry
bull FAS 150 bull FIN 46R bull 3 Percent Withholding
bull Leases Project bull Revenue Recognition bull Multiemployer Plan Disclosure
AGC Financial Issues Committee
The next Winter Meeting is scheduled for January 10-11 2017 at Trump National Doral National in Miami FL
meetingsagcorgfic
cbizmhmwebinar 89
CONSTRUCTIONVOTESCOM
bull One-stop-shop on election information bull Individuals can register to vote learn about candidates and find
their polling location bull Employers can download GOTV activity guide and sample
messages
cbizmhmwebinar 90
QUESTIONS
cbizmhmwebinar 91
If You Enjoyed This Webinarhellip
Upcoming Courses bull 1027 amp 112 Eye on Washington ndash Quarterly Business Tax Update
bull 112 How Changes to the Accounting for Consolidation Will Impact Private Company Financial Reporting
