2025 Year-End Tax Planning Strategies for Businesses

One of them would be an accounting method change for prepaid expenses or deferred income and in order to start accelerating of prepaid expenses, the IRS requires filing a Form 31 15 to change the accounting method. This change is automatic and does not require permission from the IRS in advance. It's an immediate one-time deduction and is available for previously prepaid expenses that would've been deducted under the new method for the year. The change is made income deductions. You can accelerate deferral bunching, especially if you're a cash method taxpayer Business expenses are generally deducted when paid in a year when proposed regulations appear to favor increase rates. A business may want to defer expense payments until then where feasible from a business standpoint.

Continuing on when you're making an entity choice election, you want to choose between a C corporation versus a pass through, which would be an S corporation or partnership. You can do that by making a check the box selection for a tax treatment, but you also want to be wary when you're looking at a C corp versus a pass through entity Section 1 99 A for the qualified business deduction eligibility. I'll be discussing that a little bit later on in the presentation for C Corp. Now, the net operating loss usage, you're allowed to use 80% against your current year taxable income and one other item or two other items I want to discuss is states where the entity is doing business. You might want to perform a state nexus study. This is beneficial just to look at the current states that you're filing in, whether you should be filing in them, and if there's any additional states that you're required to file in.

It's always advantageous to do a state nexus study. Last item, the C corporation eligibility for a section 1202 qualified small business stocks changes. This was definitely a significant change and refreshing to see in the one big beautiful bill act. Basically, some of the criteria are an increases the gain exclusion amount from 10 million to now 15 million increases. The gross asset test from currently 50 million to 75 million, both the gain exclusion and the gross asset test amounts would be adjusted annually for inflation starting in 2027 and it creates three new holding periods to hold the stock three years. If you hold the stock, you get a 50% gain exclusion four years for holding period. You get a 75% gain exclusion and five year holding period, you get a hundred percent gain exclusion and these changes would be effective for stock issued after the date of enactment of the bill, which was July 4th of this year, 2025.

Continuing on with business tax planning, you always want to set qualified retirement plans before year end. Those can be funded before the return is filed. You want to look if there's any basis or at risk limitations for the ability to deduct losses for pass through entities. As corporations, you always want to check before year end your shareholder loans for the ability to deduct losses and for partnerships you want to look at recourse debt. Anything that any loans or debts that you guaranteed that would give you basis to the deduct losses. Restaurant meals, those were reverted back to 50% deductibility back in 2023. I'll touch on that a little bit later on in the presentation. And one of the tax credits I want to focus on is the last bullet point, the election to apply research credit against payroll taxes on form 89 74 for small businesses.

I've seen this a lot in practice, especially with tech companies, technology companies. This is something that's out there and I feel that's not being taken advantage of. And to qualify for this, you must be a qualified small business. That's typically any business with 5 million in gross receipts or less. You must have elected the payroll tax credit on the form 67 65. That's the form where you actually file with your tax return. To claim the research and research and development credit, you must file form 89 74 with your employment tax return, which would be your form 9 41. And how it works is you elect the credit on the form 67 65, which under part three you complete the form 89 74 to calculate how much the credit would be by applying it to payroll taxes and then you attach that form 89 74 to your quarterly or annual payroll tax return and it definitely beneficial. The credit is limited to 500,000 per year for tax years beginning after 12 31 20 22, and it only applies to the employer portion of social security tax.

So picking back on form 89 74, another advantageous and refreshing item that a lot of taxpayers are happy about is the research and development capitalization under the one big beautiful Bill Act, effective January 1st, 2025. Under the bill, there's a code section 1 74 A where significant changes were made to r and d expenditures including software development costs. Now the IRS is allowing full expensing restoration for us conducting research and development expenses and the TCJA, the Tax Jobs and Cuts Act, you had to capitalize and amortize those expenses over five years. So that's definitely a plus. But if you still have foreign conducted research and development expenses, you still have to use the old rules under the TCJA, which would be you would have to capitalize and amortize those expenses over 15 years. Another item under the bill for research and development is they call it transition rules.

So you can either deduct previously capitalize us costs from 2022 to 2024. You can either deduct those amounts fully in 2025 or you can bifurcate over two years for 2025 or 2026. So at least those costs that were capitalized in the past, you wouldn't have to keep capitalized them into the future. You can strategize and see if you wanted to deduct them in 2025 fully or break them out between 2025 and 2026. Eligible small businesses, meaning the average annual gross receipts test of 31 million or less may elect to apply section 1 74 a retroactively to years beginning after December 31st, 2021. But that would need to be done by filing an amended return. And now that leads us to our first polling question for business taxes. Federal under the one big Beautiful Bill Act research and development expenses conducted outside of the US cannot be fully expensed and the key is conducted outside of the us. True or false?

Okay. And the answer to that is it's true only US expenses can be fully expensed. Any foreign conducting expenses still need to be amortized over 15 years. The next slide, federal tax deductions for bonus depreciation. So what's the criteria for a bonus depreciation? What would be a qualified asset and listing these bullet points, it's any property with a recovery period of 20 years or less. It could be computer software, water utility, property. I've seen it, certain aircraft not used in transportation business. Those are a few key items. What would be a qualified asset? A common disqualifier would be a commercial building and its structural framework, which is 39 year property that's disqualified for bonus depreciation. And a keynote is even the elevators. The escalators inside of the building are considered structural, so those wouldn't be considered for bonus depreciation. Any new expansions to an existing building residential property, which is 27 and a half years and any deposits or receipt of property but not placed in service. The key is that the asset needs to be placed in service and then you can take bonus depreciation. So what would be some planning ideas? If you have any assets you're going to be placing into service before 2025 year end and utilizing bonus depreciation, you can actually accelerate those deductions in this year as opposed to if you place it in service in January, 2026, you wouldn't be able to take that deduction in 25. You'd be able to take it in 2026.

Continuing on with bonus depreciation, another item in the one big beautiful bill act that was advantageous is bonus depreciation. Any property acquired or placed in service after the key date, which is January 19th, 2025, it's made permanent a hundred percent bonus depreciation. If you're not familiar or if you can recall under the Tax Jobs and Cuts Act for 2025, it was 40% allowable for bonus. And that's a little bit later in this slide. I'll touch on that. There's a new code section in the one big beautiful bill act section 1 68 N, which is called qualified production property, and that allows a hundred percent expensing of certain non-residential real property using a qualified production activity within the US and some items to keep mind, the construction must begin same key date January 19th, 2025, and before January 1st, 2029, the taxpayer must elect to treat the property as QPP qualified production property. It includes manufacturing, production, refining of qualified products generally includes any tangible personal property but does not include food that is served outside. So restaurants, this would not be allowable. One other items to touch on, its leased property doesn't qualify, and any portion of the building used for non-production purposes such as for office space or research and development sales would be excluded from using this a hundred percent expensing of the qualified production property.

There's also a transition election to apply the 40% rate, which is what I touched on earlier. That's from the Tax Jobs and Cuts Act. If a business acquired property before January 19th, 2025 and places it in its service in 2025, the TCJA phase down rate of 40% may still apply. So you would have to use some judgment and some year end tax planning. In such cases, businesses may elect out of the a hundred percent bonus depreciation and apply the lower rate by filing form 45 62. And this election is typically made on a class by class basis and must be done timely and consistently touched on bonus depreciation. So the flip side of the coin from bonus is section 1 79 expense. It's an annual tax write off of section 1 79. The limit for 2025 is 2.5 million. It's phased out of 4 million for qualified additions, dollar for dollar basis, and it completely phases out at 6.5 million for total additions.

For 2026, the amount is a little bit higher to write off it's 2,560,000 and 4,090,000. It's phased out taxable income limitations. So when you have bonus depreciation and you have a taxable loss, you can still take bonus depreciation as opposed to section 1 79. If you have a taxable loss, you can't have a section 1 79 depreciation write off. It only goes to break even. So that's one of the key differences between bonus depreciation and section 1 79. Certain criteria for section 1 79 assets. It's tangible personal property, machinery, equipment, furniture and computers, computer software. And this other item qualified improvement property, which I consider, I call it QIP. And this includes improvements that meet all the following criteria. It's made by the taxpayer. It's to the interior of a non-residential building. It's placed in service. The building itself was first placed in service and a few examples would be HVAC systems, electrical plumbing upgrades, interior drywall ceilings, lighting and flooring, and any interior renovation non involving structural changes. The exclusions from this would be any building enlargements elevators or escalators and any internal structure framework. And the recovery period for qualified improvement property is 15 years under makers, the modified accelerated cost recovery system.

Some key reminders regarding fixed assets and depreciation. It's always advantageous to do a core segregation study, especially if you're doing a build down on a building. You can place different items or different in different asset class buckets and accelerate depreciation. Heavy used vehicles with gross weight over 6,000 pounds are eligible for section 1 79. Certain type of SUVs qualified for that, but there's limits on those. It would be limited to 31,300 for 2025 and 32,000 for 2026. You can elect out of bonus depreciation based on class of assets. If you have a seven year life on assets, you would elect out of all of those assets for seven year life. One key item to note, just be aware of that the states don't always conform and have different rules when applying bonus depreciation or section 1 79. One state in particular New York state doesn't conform to bonus depreciation.

Something to keep in mind. And also on the flip side, section 1 79, California and New Jersey only are capped at 25,000. So as opposed to federal where you can deduct a hundred percent of section 1 79 as a write off the minimus expensing safe harbor, this is another key item. This allows smaller items can be immediately expensed. It's always advantageous to have a written expense policy in place at the beginning of the year. And if you do and you have an applicable financial statement, you can deduct $5,000 or less of those items per item or invoice without an applicable financial statement. You can deduct $25,000 or less per item or invoice, but for the last bullet point, taxpayer can set a higher amount outside of the safe harbor, but you need to have support and substantiation for the amount that's chosen.

Qualified business income deduction QBI, this is advantageous to taxpayers that have a business of pass through sole proprietorship under the one big beautiful bill act. Another item that's refreshing to see it was made permanent. I know there was a lot of back and forth whether it would go away or whether the percentage wouldn't be 20% deductible for business income, it would be maybe 23%, but it's made permanent and you're still allowed to deduct up to 20% of domestic income earned by the business. Another item under the new bill, that's another refreshing thing to see. There's a minimum deduction of $400 for businesses with at least a thousand dollars of qualified business income. So you have a thousand dollars of qualified business income, you're allowed to write off 400 for A QBI deduction. So if you're qualified for section 1 99 A, the top effective tax rate would be 29.6%.

And this applies whether the taxpayer is active or passive in the business. It's a reduction in taxable income. Doesn't matter if it's both regular or a MT tax and it doesn't reduce basis. And where I saw this come into play over my career that was very advantageous was a pass entity that was selling their business. They had hot assets which are considered ordinary assets. They were able to benefit from this QBI deduction on the ordinary portion of the gain. So they were able to take a 20% deduction on off the top of the ordinary assets that were sold.

Continuing on with qualified business income deduction. It's got to be a qualified trader business or it's a specified service trader business. An SSTB. What would make it be considered an SSTB that involves performing the services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services or any type of business whose principal asset is the reputation or skill of one or more of its employees or owners. They wouldn't qualify for this QBI deduction unless their income is below a phase out threshold, which for 2025, the phase out threshold for married filing jointly couples is 247,300.

You can net negative QBI for one business and offset a positive QBI of another business. A negative QBI carries over. And there's also disclosure requirements on pass through K ones from partnerships and S corporations that have to disclose the qualified business income deduction information. So what are some year end strategies that we can use for qualified business income deductions? So if you're a taxpayer with income near the threshold for 2025, you may benefit from accelerating deductions or deferring income to any extent possible so their taxable income falls below the threshold. Similarly, if you're a taxpayer that is well below the threshold for this year for 2025, but expect to exceed it next year for 2026, consider options to pull more income before year end into 2025.

Meals and entertainment. Entertainment, 0% deductible unless it meets certain exceptions, like if you're hosting a Christmas party, meals are 50% deductible unless it meets a certain exceptions. Restaurant meals, those were reverted back in 2023, the 50% deductible. And then meals at entertainment events are 50% deductible. So if you're going to a sporting event, a concert going to the theater, the actual tickets to the event, those would be 0% deductible. But the meals that are at those events, those would be 50% deductible. So you need to have very good books and records and be cautious and bifurcate out those two items. So you're able to take that 50% deduction for the meals.

Section 1 63 J, the business interest expense limitation. There was some significant changes under the one big beautiful bill act. There was a restoration of EBITDA. So now when you have adjustable taxable income, you would be adding back depreciation, depletion and amortization to calculate your 1 63 J business interest limitation in 2024, this was disallowed. You wouldn't be adding back these items to calculate the business interest expense limitation. And the business interest expense deduction is limited for taxpayers with a three year average gross receipts of 31 million or more in 2025. And then for 2026 it's 32 million or more. The business interest expense deduction, it's limited to the sum of your business interest income, 30% of the taxpayers adjusted taxable income and four plan financing interest and the adjustable taxable income. It's computed without regard to any of the four below bullet points. Items of non-business income gain deduction or loss business interest expense or business interest income and operating loss deduction. And QBI qualified business income deduction.

Continuing on this topic rule applies to all taxpayers and all debt, whether you're domestic or foreign. If you are individual, if you're a C corp or a pass through entity, this is still applicable. The excluded trades of business would be a real property trade of business can elect out of this section 1 63 J, but be cautious because the trade-off you're required to use longer depreciable periods and no bonus depreciation is allowed and the election is irrevocable. Net operating losses NOLs, A few changes that have gone on throughout the year, years beginning after 12 31 20 17 and before 1 1 20 21, you were able to carry back an net operating loss five years without any limitation. There was no 80% limitation that's now in play against taxable income and you were able to carry forward indefinitely those net operating losses for years beginning 1 1 20 21. There's no carryback of that. Net operating losses. It's carried forward indefinitely and there's an 80% of taxable income limitation. So if you have a hundred thousand dollars of taxable income, you're only allowed to write off 80% of that.

So planning strategy. When would you want to avoid a net operating loss? If you're a corporation other than a large corporation that anticipates a small net operating loss this year and substantial net income next year, you may find it worthwhile to accelerate just enough of your 2026 income or to defer just enough of your 2025 deductions to create a small amount of net income for this year for 2025. The reason for that is this will permit your corporation to base its estimated tax installments for 2026 on a lower amount of income shown on your 2025 return rather than having to pay estimated taxes based on a hundred percent of your much higher 2026 taxable income. So what I touched on earlier in the presentation, you don't look at when you're doing tax planning strategy, you don't look at just the current year. You want to look into the future if there's ways that you can strategize and be proactive and shift things into 2025, that would affect 2026 in a favorable way.

Section 4 61 L. This is the loss limitation rules for taxpayers other than corporations. Unfortunately, this has been unfavorable for the taxpayer, but it's made permanent under the one big beautiful bill act. It extends the limitation of excess business losses for taxpayers other than corporations for 2025 tax year. If you have an overall business loss, your limitation is 626,000 in case of a married filing joint return. Your net business losses in excess of this amount will be disallowed on your 2025 return carry forward indefinitely and then utilize it as a net operating loss. But the net operating loss would only be utilized 80% of your taxable income. The one big beautiful bill resets the inflation date to 2025 resulting in significantly reduced limits in 2026. And for 2026 tax year, the limitation for section 4 61 L is 512,000 for a joint return and 256,000 for single follows. Last polling question. For 2025 tax year taxpayers are required to not add back depreciation, amortization and depletion deductions to arrive at their adjustable taxable income when computing the 1 63 J business interest induction. True or false? So key is 2025 tax year. Are you required to not add back those three items, depreciation, amortization, and depletion?

The answer to that is false. Is false is if this was 2024 the question, it would be true. It's false. You add back those items to calculate your 1 63 J business limitation. And that's the end for me on my presentation. I'm going to hand it off to my colleague Jen Slaw. She'll be talking about international tax.

Jennifer Sklar:Hi everyone. Can you see? I hope everybody can see me. I see some of my other colleagues. So, hi, I'm Jenn Sklar. I spoke last year on international tax. I'm a partner in the international tax group here at EisnerAmper. I never thought that in my lifetime I would have another significant tax reform, but here we are. And last year was mostly case law. There was a lot of significant cases that were outstanding and this year it's the actual statutory and regulatory changes. So let's get to it. Oh, we're going to start with a, Nope, that's the answer to Michael's. So we'll keep going on that. So here's mine. What does O-B-B-B-A represent? Obviously bureaucrats built big acronyms, one big beautiful bill act, oh boy, big bill again or officially baffling but bold attempt. And while you guys answer that, I will move to the next slide.

So the one big beautiful bill act or the acronym O-B-B-B-A or O triple B or OB3. Obviously in the tax world we always have to have different ways of saying different things. So there were some significant changes. Guilty became net CFC, tested income, sorry, I'm still used to guilty. I have to practice, this is a good practice for me. So Gil became net CFC tested income. Fitty became fed day, which is foreign derived deductible eligible interest again or eligible income. Again, I have to practice that. And then we had some simplification of the foreign tax credit rules, which was welcome. We had a significant international tax rule. The CFC look through rule has been made permanent, it's been temporary and sunsetting for many years and the downward attribution has been repealed. So it was repealed with the TCJA and now they came to their senses and they've un repealed it.

So they've reinstated it. Provisions that I speak about, all of the provisions are effective for tax years beginning after 20 December 31st, 2025, unless I otherwise specify in the slide deck. So these new provisions that I'm going to speak about, they require multinational businesses to look at their current structures and to evaluate the effect of the changes on financial forecasts and the availability of foreign tax credits. And then companies should also look to update their intercompany agreements and to look at their expense allocations. So as I go through the slides, you'll see that a lot of these areas need to be addressed in order to comply with the new law as well as to minimize the tax liability for your business.

Great. I thought the other ones were quite clever, but so I'm happy some of other ones of you did. So one big beautiful bill app, that's the one. Okay, so let me just close this. This is very small for me. One second. Okay, there we go. Okay, so first we're going to talk about guilty to some people refer to it as necktie. Again, we always have to put something in there to make it easier to talk about. So we had gilt, which was global intangible, low taxed income, and now we have it as net CFC, tested income. Now net CFC tested income or necktie is a concept that was included within the guilty regime and now it's actually the name of the regime. And so the rebranding actually is beneficial because global intangible low taxed income was not representative of what guilty was as all of it pretty much applied to all of your taxable income under US tax principles.

So the change was intended to align better with the purpose of the provision and no longer implies that the regime only targets intangible and low taxed income. Within Gilt there's elimination of cbi. So this tends to burden asset heavy controlled foreign corporations. If you all remember, the CBI deduction was favorable. One of the favorable aspects or probably the only favorable aspect other than the deduction is to Gil. So this was a 10% return on foreign tangible assets and that was excluded from your guilty tax base. So that was very beneficial for companies that had significant assets reduction in section two 50 deduction. This is also something that we don't welcome, which is that the section two 50 deduction, which was permitted against your guilty inclusion, obviously reducing it has been reduced from 50 to 40%.

And this creates an increase or leads to an increase in the effective tax rate from 10.5% to about 12.6%. So we're still much lower than we were before the TCJA, but we are creeping up. Also, we have the increase in the foreign tax credit limitation. So as you recall, there was an 80%, there was a, excuse me, a 20% haircut on foreign tax credits that you were able to use to offset your guilty income. That has now increased from 80 to 90%. So that's a welcome or one out of four welcome portion of the provision. And this will reduce the residual US tax that are in high tax jurisdictions, maybe like France and Spain and a lot of our EU countries. And I do want to note that the guilty basket still exists and these foreign tax credits are still not able to be carried forward.

So if you don't utilize them, they disappear. And I also want to note that PT EP distributions and PT EP is previously taxed earnings and profits of post June 28th, 2025, section 9 51 a income inclusion. So your guilty inclusions that you have after June 28th, 2025 are now also subject to this 10% reduction on foreign tax credits. So your PT TEP distributions were never, your foreign tax credits on your P TEP distributions were never limited, but now they have introduced a 10% reduction, they give if you 90% and then they take it away 10% on the other end. So that's a new change that's not very welcome. And then very quickly, there's a lot of talk about how, well, there was always a lot of talk about how guilty interacted with pillar two, which is the 15% global minimum tax on US multinationals that meet a certain threshold, which is 750 million has to be over 750 million of revenue.

And the hope, the point of pillar two was to reduce the profit shifting internationally. Essentially we came up with Gil and we had Gil or the thoughts about Gilt around the time of the OECD coming out with pillar two. But of course the US went on and said we're going to create our own tax system to make sure that the US gets their piece of the pie. So there's been issues about whether or not guilty will be treated as a specific kind of tax under the OECO EC2, OECD pillar two, there are arguments that it functions similar to an income inclusion rule, which is one of the provisions under pillar two, but there's no implementation of that. So it's still a question as to whether or not OECD countries are going to recognize guilty as being the 15% minimum tax. So we have to keep our eyes posted for that.

Next we go into fdi. So FDI was the foreign derived intangible income has now become foreign derived deduction, eligible income or fide. So we went from fitty to fide and again, similar to gilt and nti, foreign derived deduction, eligible income or fede is a concept that was within the fit regime. So now they've just used it now as the name of the regime and it does align better with the purpose of the provision. Similar to gilt, we weren't talking about intangible income when we were talking about day. In fact, there are now some limitations on intangible income, which I'll get to on the next slide. So rebranding from FDI to day no longer implies that we're talking about intangibles and therefore it's a little easier for non international tax practitioners to understand what it means. So here we have the elimination of the CBI deduction.

So for, or excuse me, for FE day, it is a benefit whereas for neck tie it was not. So the 10% return effectively limited the deduction. So now without the Q by deduction, the tax burden on capital intensive businesses is decreased because the FA day deduction is now increased. So the 10% return reduced your FA day deduction and the 10% return increased your guilty income. So again here we're happy to eliminate the QI deduction and as I spoke earlier, there's a reduction of the section two 50 deduction. The section two 50 deduction applies to both guilty when we're dealing with the C corp shareholder as well as FA day. That is the two 50 deduction. So it's reduced from 37 point a half to 33.34, and that effective tax rate is increased from 13.125 to about 14%. So again, we're still beneficial, very beneficial considering the current corporate rate. So definitely want to still think about the day.

As I mentioned now there is an exclusion of intangible property dispositions and of international property licenses. So in the original city we were able to take into account income from licensing IP royalties in particular, and international property dispositions. Just the sale of the ip that income generated by a USC corp was able to be treated as foreign derived deduction eligible income. Now that's no longer the case. So not only did they take intangible out of the name of the regime, they have now taken out the intangible property out of the computation. So any income or gain from the sale or transfer of a 360 7 D ip. So that's your general patents, copyrights, trademarks is no longer eligible for the deduction. And property subject to depreciation, amortization, or depletion is also excluded. Now IP generally has those aspects, depreciation or amortization. So that's how the intangible intangibles get pulled in.

So as I mentioned, royalty income derived from licensing IP is also generally excluded. So here we are with a day deduction that is now limited for IP heavy businesses. So obviously those will touch on the tech pharma media industries. So they're going to be affected by this. This provision applies to a transaction occurring after June 16th, 2025. So again, as I mentioned in the beginning, June 16th, 2025 is not December 31st, 2025. This is one of the exceptions. And when I say the transaction, I mean obviously the sale or the effective licensing agreement meant we also have exclusion. So now we've got two benefits. So they take away intangible property income, and now we have the exclusion of interest and the exclusion of r and e expenses. So interest expenses are no longer part of the FIDE deduction and interest. Previously interest allocations significantly reduced for day benefits. So this is going to be great for highly leveraged businesses that have obviously significant debt.

We also have now the exclusion of RNE. And this should benefit companies with high RNE outlays such as the biotech industry. So that's our new FA day. Some good, some bad foreign tax credit. Simplification. Simplification, I never thought I would say that word when I'm talking about tax reform in the us, but yay. Foreign tax credit simplification. One of the most significant challenges to determining the foreign tax credit was always expense allocations in particular interest, which was very difficult to do. It took a lot of spreadsheets and a lot of modeling in order to figure out exactly what the expense for interest should be. So now it is no longer allocated to the guilty or necktie basket so we don't have to worry about interest or r and d or RNE expenses being allocated. So those provisions that had separate allocation rules are no longer relevant.

These expenses interest in r and e or r and d now reduce your US source income so that way you have more foreign source income in order to take a larger amount of credits. Only the section two 50 deduction, which I mentioned earlier and which is now 40%, and the deductions directly eligible to the neck tie are now allocated to the 9 51 cap a basket. Everything else is going to go to, well, one of your other baskets, but your interest in r and e or RD is going to go to your US source basket only. And this obviously simplifies the section 9 0 4 foreign tax credit limitation formula. They've also eliminated the section 78 gross up. So this simplifies foreign tax credit computations, but it does reduce the available foreign tax credit that can be taken. The gross up is for foreign taxes that are deemed paid on PTA.

So that's important to note that as well. There's also a new inventory sourcing rule that up to 50% of income from US produced inventory that is sold globally can be treated as foreign source income and this will increase the foreign tax credit eligibility as well. And I did note last year that there were foreign tax credit rules that were announced in 2021, significant changes to be made to the foreign tax credit rules separate and apart from this simplification. So this larger overhaul remain suspended, but it's going to eventually show rear its ugly head at some point. I'm sure after we finally digested some of this new stuff, the permanent CFC look-through rule, this rule is codified in 9 54 C six and it essentially targets passive types of income like dividends, interest rents, and royalties that are received by one CFC from A related CFC. So these amounts are excluded from subpart F income and we talk about guilty all the time.

It's so much more prevalent because it's applicable to a lot more companies. Subpart F is generally passive income. There are other types of sales and services income that fall within that purview as well. But for now we'll just talk about the passive income. So for example, if you have A1C FC and that CFC has another CFC that's a subsidiary and the top tier CFC owns more than 50%, then if that lower tier CFC pays a dividend up or pays a royalty under an intercompany licensing agreement, that will be excluded from sub part F income for the upper tier, which of course will mean that there's not going to be any sub part F income for the US shareholder. So making the CFC look through rule permanent was very welcome because this has been a provision that as it gets revisited under the tax extenders legislation, it always had to be affirmatively extended by Congress and it was set to expire at the end of this year. So this is a welcome. This is definitely a welcome, welcome change. So the certainty and for companies in particular, for companies that have a lot of CFCs, a lot of intercompany agreements, this will be beneficial for long-term planning. There's no more speculation about whether or not the rule is going to be extended.

So the benefits of permanency, it reduces the phantom sub F income inclusions. And like I said, it facilitates tax efficient structure of intercompany IP and financing agreements, downward attribution un repealed. So pre 2017 TCJA, we had 9 58 before which prevented downward attribution of stock ownership from foreign persons to US entities post 2017 TCJA. The rule was repealed as part of the TCJA and it led to unintended consequences. So any of you that have in particular large structures, a mixture of both foreign and US companies, you were pulled into this rule or this repeal of this rule or this rule no longer the absence of this rule, the repeal, it created a significant amount of CFCs. So more foreign corporations were treated as CFCs and more US shareholders of foreign corporations that were subject to guilty now neck tie and subpart F regimes. So it was a burden, it was a tax burden on US shareholders and it was a compliance burden on other US companies that were treated as owning CFCs.

So it was pretty much a disaster. Now post 2025 O-B-B-B-A, it restores 9 58 B four. So we're back to our pre 2017 rule of 9 58 B four where downward attribution from farm persons to US entities is again limited. There's also, again, we put back 9 58 B four, and now we add in another code section 9 51 cap B, which narrowly targets the specific tax benefits. So the whole point is we are just targeting the tax evasive structures that were really the intent of the statute to eliminate. And now they've narrowly applied it. We've got some new concepts, F CFCs, which is a foreign controlled US shareholder, and it just applies to those shareholders. And those shareholders are obviously defined in 9 51 cap B, and it allows subpart F and net tie inclusions to only be required under controlled scenarios. So it really does cut off a lot of the compliance as well as the taxable income inclusion burdens that the repeal had created. And that's my time. I don't think I've ever done it in half an hour. So I'm thrilled that I did that. And now I'm going to welcome Nick Montorio to talk about some state and local tax issues.

Nick Montorio:Thank you so much for that, Jen. And actually I'm going to hand it off to my colleague Denise, who will take us through the state impacts of the O OB three changes. Denise, you want to take it away?

Denisse Montorio:Thank you. Hi everyone, I'm Denisse Moderski. I'm a partner in our state and local tax group, and today we're going to cover an overview on some key provisions related to the states with OB three, following by some state tax updates on sourcing rules such as New York City corporate tax reform, California sourcing, and a new requirement with the New York L-L-C-T-A, the LLC Corporate Transparency Act. And we'll finish it with some credits and incentive planning opportunities. Okay, so I know we talked about earlier in the session about all the federal provisions related to OV three. So what I'd like to think about is now moving, switching gears to the states. We have to think about 50 state problems and one big beautiful bill. So here's a list of major provisions that are proficient that are impacted from the OV three for federal purposes such as r and d, section 1 74 1, bonus depreciation, section 12 0 2, 1 63 J limitations, and the so cap limitations. So this is just again, someone like the key provisions when thinking about staying local taxes, how does this impact your business? This is the time to start planning for year end strategies. And how does this impact taxpayers?

So for state purposes, there are two ways where states conform to federal provisions. It's one, either it's a rolling state versus static state. And generally for most taxpayers, whether it's a corporate or personal income taxpayer, two things we need to think about. What is your starting point for states? Are you starting with your federal taxable income? Is it federal adjusted gross income? And how does that come into play when you are dealing with all these changes under federal law? So for rolling states, conforming states generally this conform automatically to the IRC code. However, states may choose to decouple from certain provisions, and the other one is static conforming states. So for example, if you have states that conform to the federal provisions, however, they may choose a different date where to follow, where to decouple from in California as an example of that, Massachusetts is a very interesting state when you're thinking about conformity because they have two different assets of rules when it comes, whether it's a personal income individual taxpayer versus a corporate taxpayer. For example, for individual taxpayers, Massachusetts, it has a fixed date, conformity date through January 1st, 2024 versus corporate taxpayers, which is corporate, which is a role in conformity state. So it will follow your federal changes. However, they do have some provisions such as bonus depreciation, where corporate taxpayers, they do not follow federal bonus depreciation. So there will be a separate calculation for those taxpayers.

Here's another example of some other conform rules. For example, guilty r and d 1 63 J and overtime pay in tips. Colorado is a rolling conformity, which the state generally follows the changes under the federal law. However, in 2025, they came out with rules that they will decouple from overtime compensation and which are generally excluded for federal purpose. But this would be an add back for Colorado purposes. So California says state, it has a fixed conformity date to the federal law, and before it was January 1st, 2015, effective October 1st, 2025, California changed their conformity date through January 1st, 2025, which is pre-B three rules. O OB three came in effect in July in 2025. So this is key important to know, it's that while they may follow adopt some TCJA rules, right? It does not conform to OB three.

Here's an example of some key provisions for rolling states. As I mentioned earlier, rolling states generally follow automatically changes to the federal law. However, this states for example, Alabama, Mississippi, Rhode Island, decoupled from 1202 QSBS limitations. While it's in rolling state, it doesn't follow any of the federal changes under QSBS, section 12 0 2 1 63 J limitations. Rhode Island does not conform to the federal changes. Michigan has very, it's also another rolling state, but they do have various provisions from the OB three that they do not follow Section 1 74, it's one of the main ones where we anticipate states to decouple while maybe rolling states. They do decouple from federal law and main change their conformity. This is a static state. They changed their conformity date to the federal code to December 31st, 2024. So that means that they do not follow any of the OV three provisions. As the government shutdown finally came to an end, we do anticipate many states to start providing guidance and coming out with guidance in terms of whether they will follow o OB three provisions or not in early 2026.

So we do expect a lot of movements in this area, it starting with the new year, but I think most importantly it's that while you are analyzing with year end planning is what is the impact for federal purpose for taxpayers. It's also think about how does this impact your state and locus, especially with year end estimates and extensions coming up. Something to think about that just because the state is rolling state doesn't automatically mean that it's going to adopt federal changes. So there could be differences as we mentioned, some of these examples and how does that impact, how does that impact your state adjustments, your state taxable income and payments. Other things that to think about from a reporting standpoint is as states start to deco with some of these provisions, how does that impact your reporting on your return? Right? Do we expect forms to be updated? And we do see that some of the states will provide certain lines or additional lines to kind of break out certain adjustments that states will decouple from federal purposes. We have our polling question, do all states conform to the OB three provisions? So while we'll go through the polling question, I am going to pass it on to my colleague, Nick, to talk about other key areas on state and local tax.

Nick Montorio:Yeah, and I'll just underscore some of the things you talked about, Denise, with conformity. So like you mentioned with Massachusetts, New York is another where it's static for certain purposes, static conformity, rolling conformity for others, and then you could have modifications on top of that. So it could be static and that could think that the state doesn't conform to the OP three, but it could decouple and actually start to conform to particular provisions and vice versa. Could be a rolling conformity state, but decouple from some of those OB three provisions. So it can get pretty complicated pretty quickly, especially if you're thinking about multiple states and multiple provisions in mind. So we have two slides on California and how they have finalized their amendments to their market-based sourcing rules. So this first section of the slide doesn't reveal too much. That's too interesting. It provides the general rule for services, depending on whether those services are for real property would source those receipts to the location of the real property.

If the federal services performed on tangible personal property, you would source that to the location of where the property is or where that property is ultimately delivered for services relating to intangible property. Pretty standard rule in the multi-state context where you would source those receipts to where the customer is using that intangible. And finally, services related to individuals are sourced to where the individual is. Again, nothing to earth shattering here, but where it gets somewhat interesting is the, I guess, codification of the reasonable approximation approach. And I always think of a scenario where taxpayer has no way of knowing where its customers are using its service. And the most common example is online digital advertising where your service could be to serve these ads onto the internet so people can click on them, but you have no idea exactly where people are clicking on them.

Or even if you could figure that out, it would just be overly burdensome. That's a scenario where a taxpayer could use reasonable approximation or census data as one example, as of methodology to source their receipts from performing that service. The other thing to note on the slide would be California, like a couple other states, New York and New Jersey among them have adopted safe harbors. So it can be very difficult to apply market-based sourcing principles if you have many, many customers in many different revenue streams. These safe harbors allow taxpayers to just use the customer's billing address provided certain requirements are satisfied. In California's case is that the services are performed for more than 250 customers and the safe harbor cannot be used for a customer that comprises of 5% or more of total receipts. So it's still pretty standard stuff. But here's our answer to the polling question.

All states conform that it's false, and that's correct, that it's false. I dunno how to say that properly. This is California's rules get a little bit interesting. This is an idea that's been, I think New York adopted this. New Jersey has adopted this among others where the services performed in the context of asset management services. You actually source that not to your customers a billing address or customer's location, but actually to the location of the investors. It's a look through rule to see where these investors of your customer are actually benefiting from your asset management services. Denise, you wanted to share some comments on this?

Denisse Montorio:Sure. I think it's important to know for management companies specifically those that I know some of them may have been implementing or this draft regulations applying a look through. But for those that this is a good time to start analyzing, could there be an access now when you have, for example, a management company having fees paid for from funds that have California domiciliaries, right? That could be a way to understand your impact and maybe nexus and what are the implications? Are you over the threshold or not? So something to definitely keep in track to keep in mind as California is a very aggressive state. Good. It's a good practice to start thinking about how does this impact your 2026 filing or any payments required during extension time and estimates.

Nick Montorio:And then more industry specific rules for broker dealers. This again, in California, but it's market-based sourcing provisions to go through the details here. But if you are a broker dealer now, there are very specific provisions for how to source your receipts from those activities and you go through a cascading set of rules depending on exactly what information you have. Denise,

Denisse Montorio:One thing I didn't go into detail when we're calling OV three conformity. One of the key areas is that the sole cap limitation of $10,000 did not go away for federal purpose. That was extended through the end of 2029. However, they did increase the limitation from 10,000 to $40,000. So California was actually one of the states that had the PTT and it was set to expire at the end of 2025. So for 2020, they extended the program through tax year 2030 to align to the federal changes. So the main changes in California PE is one, historically, it require a prepayment by June 15. In order to qualify into the California PITA regime, taxpayer had to make a minimum of a thousand dollars or 50% of their prior liability provided that they made an election in the prior year. Otherwise, a thousand dollars minimum payment is due by June 15th.

They changed us a little bit starting in 2026. However, key area here is that for taxpayers, the missed is June 15 prepayment. There is a potential penalty, a 12.5% limitation. So the credit, whatever the credit or the amount would be, it is reduced by 12.5% of what was unpaid or underpaid. So it's something good to think about as you are modeling whether PT election makes sense to do or not, and if it does, do we need to make a payment by June 15 because this 12.5 limitation can basically offset the whole benefit of the PTECH credit. So something to keep in mind. So that's one of the big changes or others is also factoring in any O OB three conformance. Now, how does this impact your California PTT taxable income, your taxable base for taxpayers? That's all

Nick Montorio:Great. A few more salt updates. So New York City is just about hopefully to finalize its corporate tax regulations stemming from the 2015, you heard me write 2015 corporate tax reform. So they waited for New York State to finish its regulations, which was the end of 23, and now we're almost two years later, New York City's working through their corporate regulations. To their credit, they did have some rules that were not well received by the tax community and New York City has changed those rules. The most notable was that they were going to require corporate partners to use partnership sourcing rules when there's a tiered partnership structure or the corporate partner on top. They backed away from that after heavy blowback from the tax community. And now the corporate partner will actually use corporate sourcing rules with respect to their income from received from a partnership. There will be some subtle deviations.

We're still working through draft regulations now. One of them really on the finer points of exactly how to source sales from passive investment customers, which is the idea of looking through. Another change could be the safe harbor that we talked about, the 250 customer rule, being able to use billing address if you fit within that safe harbor. New York City has talked about raising that number of customers, just so not everyone will be able to qualify under that safe harbor. Some other changes from around the country, Massachusetts, Montana, Tennessee, all will phase in or fully adopt single sales factor for income apportionment for 2025 and Arkansas had some state tax reform that'll be effective in 2026 where it adopts market-based sourcing. So again, sourcing receipts based on your customer location and that'll be for corporate and pass through taxpayers.

We wanted to spend a few minutes talking about another multi-state trend, which is this concept of internet activities and public law 86 2 72. So for those we know public law 86 2 72 is a federal provision that prohibits a state from imposing a net income tax on an out-of-state business when their activity is only the sale or solicitation for sale of tangible personal property. So in order for this provision to apply, the orders must be approved and shipped from outside of the state. The multi-state tax commission, which is not a government body, just a commission of practitioners and states adopted I guess a draft interpretation of how public law 86 2 72 may or may not apply in this digital age of websites and internet activity. But they came up with a list of dozens of internet activities that would actually exceed the protections of public law. 86. 2 72 meaning that if a taxpayer that was otherwise protected seller of tangible personal property otherwise protected under public law, they would no longer be protected if their website had certain features.

Have some examples here. Job postings for a non-sales position, if a taxpayer had that on their website and it could be accessed in the other state, then they would no longer be able to avail themselves of public law 86 2 72 protection. So as you can imagine, this basically eviscerates that federal protection, and I saw a headline today that the Justice Department Federal Justice Department is actually looking into these types of state laws, this being one of them that could hinder interstate commerce. Now, why the Justice Department is looking into this a little bit strange, but nonetheless there is some attention paid to this, maybe a lot of attention paid to this at the federal level to see if these provisions really should be if they're proper. There's been a ton of state tax litigation in this California adopted these provisions through a technical advice memorandum. Long story short, a San Francisco County Court invalidated these guidelines saying that they were effectively underground regulations and that the state did not adopt these rules consistent with the rules required for promulgating a regulation.

Let's say anecdotally, we can say that the franchise tax board is still sort of pushing this idea where they're trying to assert nexus on out-of-state taxpayers that otherwise could claim public law 86 2 72 protection with California, it's a bit of a double-edged sword because California does have a throwback provision and if you use California's interpretation of public law 86 2 72 in every other state, then taxpayers that otherwise would be subject to California's throwback provision could say, well then I have Nexus in all those other destination states and I don't need to throwback sales to California. It's obviously a lot of gray there, a lot of uncertainty in that position, but it's something to think about. Massachusetts is the most recent state to adopt these guidelines and the way they adopted it was pretty vague. They just sort of generally referenced that internet activities could create nexus without enumerating the dozen or so different various activities. I think it was a change in the regulation that allows or empowers the department to assert nexus under certain facts and circumstances, but they have not exactly specified exactly what those circumstances may be. New Jersey did incorporate these MTC changes and they also modified their regulation on June 16th, 2025 to incorporate these rules.

New York also did the same through their regulations, which were, as I mentioned before, finalized at the end of 23. The interesting idea there is those regulations generally are retroactive back to 2015 when New York State and city reformed its corporate tax laws including these public law rules. However, there was case law on this and the New York courts have determined that these provisions specifically with respect to public law 86 2 72 cannot be applied retroactively, only prospectively from the date of the finalized regulations. December 27th, 2023. I want to talk about one other trend that we're seeing and affecting some of our clients would be this additional property tax imposed on second homes. I first saw this with a catchy headline about the Taylor Swift tax out of Rhode Island, which will go effect into 2026. It's effectively a new surcharge on homes that are not used as the owner's primary residence or not lease for at least 183 days during the year.

And apparently this will impact Taylor Swift and it could result in a pretty large tax assessment for her and people like her. I got interested in the topic and I looked to see what other states have this provision. Montana actually has now a two-tiered system aimed at discouraging people having second homes in the state by having a potentially lower rate applied to primary residences and a higher tax rate being applied to other residences as high as 1.9%. That 1.9% will also apply to the primary residence if it's valued at, I think it's about $1.5 million for 2026.

Tariffs obviously a big topic at the international and federal levels, but it obviously has significant state and local tax implications. First and foremost, taxpayers, particularly in the lower and mid market, will have increased economic nexus as a result of tariffs as their gross sales increase. That will mean they'll be triggering bright line economic nexus thresholds in more states. In terms of the tax liability itself, sales tax liabilities go up, whether it be on the purchase side or on the sales side, an obligation to collect meaning the risk for sales and use tax exposures for businesses really increases exponentially as a result of tariffs being included in the purchase price, which is generally going to be also part of the taxable consideration. States like New York, California have been very clear on this that to the extent that the seller is including the tariff amount in the invoice, that amount will also be subject to sales tax. Gross receipts, taxes very similar, very similarly, they will also increase liabilities for gross receipt. Taxes will also increase as a result of having tariffs in the taxable base. Property taxes will likewise increase for the same exact reason as the price of goods increase, the price of property increases and the tax imposed on real and personal property increases. Similarly.

Denise, you want to talk about the Corporate Transparency Act?

Denisse Montorio:Thank you. So as an update to the Federal Corporate Transparency Act, it no longer applies. New York was one of the states that did come out with their own L-L-C-C-T-A rule and it basically generally mirrors what the federal regulations are. So key noteworthy point here is that who is subject to this reporting and that applies to all domestic or foreign LLCs that are former authorized to do business in New York. So an LLC, it could be an S corporation, a C corporation if it's a form as an LLC. So this act only applies to LLCs. There are some exemptions. Most of them follow the federal regime and to what's considered an exempted. But here are some examples like credit unions, insurance companies, banks, et cetera. One key thing to know is that while a company may be exempt from the filing, there is an exemption certificate that has to be filed with the state.

So make sure this is something that you have to, if you are subject to A or U are exempt, there has to be a exemption certificate file. What is disclosed? First it's the beneficial owner, so 25% or more of ownership or substantial control. Most of these requirements are very similar to what the federal requirements were. You have to disclose your legal name, date of birth, current address, unique ID number, for example, like a passport or a driver's license deadline. So any entity, any LLC that is formed or after January 1st, 2026. The filing is due within 30 days of formation. An existing LLC or an LLC that is registered or authorized to do business in New York before January 1st, 2026, they have until January 1st, 2027. So most importantly, I guess it's for any company LLCs that are formed starting next year, let's say January 5th or January 15th. They have 30 days from formation.

So important to know annual updates are required for all entities and also if there are any changes in ownership, changes, mergers, acquisitions, their updates needs to be filed with the state. Now the penalties are very substantial for noncompliance. For example, it could go up to 500 per day. There is no maximum cap. The state has the authority to suspend taxpayers from conducting business in the state. There is a $250 reinstatement fee after suspension and public disclosure of non-compliance such as loss of good standing status. A critical impact here is that the state does have the right to forfeit the rights of a taxpayer to do business in the state. So what does that mean? For example, if you have an entity that it's not compliant and they need to make their PT election for 2026, which is generally due on March 15th, 2026, important to know that if there is non-compliance, there is a risk of the state forfeiting their business, their license, their ability to conduct business in the state. So could that prevent them from making a PTT election or any other transactions done in the state? Important the dates to remember when this LLC file reporting requirements are due.

Without further ado, we will pass it on to our colleague, Annette, who will cover some credits and incentive opportunities. Thank you.

Annette Fago:Thank you, Denise. So I know we only a few minutes left, but we wanted to hit some highlights regarding credits and incentives because it's the time of year that you should be looking back to see what occurred, to see if you can possibly qualify for some opportunities and then obviously a bit of a reminder as to what to think about as you go forward. Because one of the most lucrative areas that a company can see in this, in state and local is in the credits and incentive space, especially related to expansions and relocations. And at this point it doesn't take very much to qualify for an incentive. Many communities are very aggressive in terms of trying to incentivize companies to grow in their community. So just to give everybody a sense of what that looks like beyond what Denise said at the beginning of a presentation about 50 states and changes amongst those, think about this across every city and town and county, not just state, right?

Because in most parts of the country, incentives are offered at the local level. And so what that really extrapolates to is thousands of credit and incentive opportunities. They're driven primarily by capital investment and job creation. Those are the two primary drivers. Sometimes you only need one of those drivers, sometimes you need both. But that's the primary focus of most incentive programs. The other aspect would be training, but the focus really initially is on job creation and capital investment. And then you can think about incentives two ways. One, what is statutorily available? What can you take advantage of regardless of anything else? The law says that something's available and you just need to fill the forms out. That may be complicated, but their forms nonetheless, as opposed to having to get pre-approval or typically in this space, pre-approval is critical, right? Incentives are something that's offered to induce behavior.

So typically you need to get pre-approvals. In the instances where some of these states offer statutory incentives, that burden is usually gone. And so there's two ways to think about it. Like I said, statutory or discretionary. And then when we're thinking about those benefits, what they can look like, I mean they run the gambit, they can be income tax credits and there are federal credits and state credits that couple together. Sometimes they're property tax exemptions, withholding tax credits, I mean you name it, right? This is an area that's broad and widely applicable. So what are the incentive triggering events that you need to think about? Again, what happened this year? What's going to happen next year? And that is job creation. Was there a transaction, a merger or an acquisition that maybe triggered something, either invalidated, an agreement that you had in place or maybe the reason to get some incentives from a state, some kind of a movement of people and buildings.

Also, the purchase of new equipment training, like I said before. And then the most obvious, which is the stuff that gets the news headlines, which are out of state relocations or expansions. But even with that, you can receive benefits for an in-state expansion. You don't have to necessarily have the threat of another state to incentivize a project. So let's go to the sixth polling question and all important polling question. Which of the following programs are available in New Jersey? A, the angel investor tax credit, B, grow, New Jersey assistance program, C, none of the above, or D, both A and B. So we got a little tricky here at the end.

Alright, so while you're answering those questions, I'll bring up some others to talk about. Not for polling purposes though. What are the questions you should ask as you look at what happened of last year and what your future plans are, they're really repetitive. And the same thing over and over. What happened? Did you buy any assets or did you place anything in service? Significant purchases may qualify for investment tax credits. Did you approve your building in some way? Really? Again, this is on a case by case basis, but renovations, upgrades, expansions may qualify you for some investment tax credits. Did you increase your headcount? We can look retrospectively. There's certain states like Georgia for example, where you can look back and do calculations relative to job creation. And you don't need to create 25, 30, 40 new jobs. It can be just five depending on where you're located.

Let's look at future plans. What are you doing over the next 12 to 24 months? And I understand in this economy can be really challenging to predict far out, but that's what communities are asking for. And so just realistically to start the conversation as soon as possible. Are you looking at new product development? Are you looking to enter new markets? Are there plans to expand, relocate, modernize facilities? Right? And then going back to training and workforce. Are you hiring new people? Are you be training them, right? These are always, I mean, I'm like a broken record, right? How much capital investment happened or will happen? How many jobs were created or will be created? Those are the triggers to look at. If you focus on those, the rest of it comes with it. You need to understand those two numbers first and then you can think about what you can get back retrospectively or what you can do forward.

And then just as we wrap up here, here's the answer, both A and B. Great, that's the answer. I appreciate everybody staying focused to the bitter end here. So what are the questions or what are the considerations, right? The key considerations, and I think we've highlighted really the key points. Don't commit before negotiating. Don't sign a lease a purchase agreement or make a public announcement before you try to secure incentives. Once one of those three things have occurred, the chance of getting any discretionary incentives, that's really off the table. Once you commit, you lose leverage. And that is the name of the game. It doesn't necessarily mean you might lose out on a statutory opportunity, but again, discretionary incentives are where the money is at and really where the biggest bang for your buck is. And also usually the ones that are most easily monetizable.

Second, engage early in the planning process. So I can't emphasize this enough as well. The sooner you focus on this and ask the questions, the better off you are. Again, once everything's, the decisions are made, papers are signed, it's too late. And then think about incentives as part of your business strategy regularly consult what your plans might be and understand from your tax consultant what possibly is on the table from a credited incentives perspective. It may be nothing. It may be something. And again, timing's everything because it's a public process often. And what that means is there are meetings, there are so many different review periods that have to happen. And so what needs to be done at this point is think for the future and the more you think forward, the better the opportunity for you to save money and increase the ROA in the project as a result of seeing. And at that, I think we're at 1230, so I'll hand it back to you, Bella.

^{Transcribed by Rev.com AI}