DIAMOND DISTRICT MONTHLY Vol. 97 June 2018 97 Comptroller Stringer Announces New Transparency Tool for Checkbook NYC Dear Diamond District Community: I would like you to know that for the first time ever, detailed sub-vendor spending will be displayed on Checkbook NYC – the award-winning online transparency resource for City contracting, payroll, spending, revenue, and budget data. The update will provide a new level of insight into how sub- vendors are used by City contractors. “Checkbook NYC lets New Yorkers look under the hood of the agencies that represent them, and today’s update makes it better. It’s another step to- wards reinventing how we, as a government, interact with our constituents. With technology changing rapidly, we have an oppor- tunity like never before to make government more accessible to everyday people. That’s exactly what this new tool aims to do,” New York City Comp- troller Scott M. Stringer said. “Making more data public also encourages change. We want to see NYC Comptroller Scott Stringer 47TH STREET BID SEMINAR SERIES Continued on Page 13 How the New Tax Laws Will Affect Small Businesses E lizabeth Gillon, Managing Member of Gillon Tax Advi- sors, LLC gave a presentation to a packed room of members from the Diamond District community. The topic she spoke on was, How the New Federal Tax Laws will Affect Small Business Owners. “The businesses in the Diamond District are entirely ‘small businesses’ as defined by the US Small Business Administration, so this topic is of great concern to all our stakeholders,” said Michael Grumet, the 47th St. BID’s Executive Director. “How businesses are taxed will determine their profitability for the year. Our members turned out in such a show of numbers because they are very concerned.” “Ms. Gillon presented the changes in the federal tax law in a way that was understandable to everyone,” said Jeffrey Mordekai, an attendee of the seminar and BID Board Member. “She brought up lots of topics that I will discuss in further detail with my accountant.” “This topic is of such importance to our business owners that we will pro- vide the information in two install- ments so we can comprehensively cover the material,” said Mr. Grumet. Seminar Presentations on Pages 14-15 New Tax Laws seminar attendees
Transcript
D IA M O ND D I S T R I C T
MONTHLYVol. 97June 2018
97
Comptroller Stringer Announces New Transparency Tool for Checkbook NYCDear Diamond District Community:
I would like you to know that for the first time
ever, detailed sub-vendor spending will be displayed on Checkbook NYC – the awa r d - w i n n i n g o n l i n e transparency resource for City contracting, payroll, spending, revenue, and budget data. The update will provide a new level of insight into how sub-
vendors are used by City contractors.
“Checkbook NYC lets New Yorkers look under the hood of the agencies that represent them, and today ’s update makes it better. It’s another step to-wards reinventing how we, as a government, interact w i t h o u r c o n st i t u e n t s. With technology changing rapidly, we have an oppor-tunity like never before to make government more
a c c e s s i b l e t o eve r yd ay p e o p l e . T h a t ’s e x a c t l y what this new tool aims to do,” New York City Comp-troller Scott M. Stringer said. “Making more data public also encourages change. We want to see
NYC Comptroller Scott Stringer
47TH STREET BID SEMINAR SERIES
Continued on Page 13
How the New Tax Laws Will Affect Small Businesses
El i z a b e t h G i l l o n , M a n a g i n g Member of Gillon Tax Advi-
sors, LLC gave a presentation to a packed room of members from the Diamond District community. The topic she spoke on was, How the New Federal Tax Laws will Affect Small Business Owners. “The businesses in the Diamond District are entirely ‘small businesses’ as defined by the US Small Business Administration, so this topic is of great concern to all our stakeholders,” said Michael Grumet, the 47th St. BID’s Executive Director. “How businesses are taxed
will determine their profitability for the year. Our members turned out in such a show of numbers because they are very concerned.”
“Ms. Gillon presented the changes in the federal tax law in a way that was understandable to everyone,” said Jeffrey Mordekai, an attendee of the seminar and BID Board Member. “She brought up lots of topics that I will discuss in further detail with my accountant.”
“This topic is of such importance to our business owners that we will pro-vide the information in two install-ments so we can comprehensively cover the material,” said Mr. Grumet.
Seminar Presentations on Pages 14-15
New Tax Laws seminar attendees
2 JUNE 2018 DIAMOND DISTRICT MONTHLY2 JANUARY 2016 DIAMOND DISTRICT MONTHLY
The Diamond District Monthly is published monthly by the 47th Street
Business Improvement District.
The New York City Council recently passed 11 individual bills designed to provide workers with greater protection against sexual harassment in the workplace.
The most significant piece of the Stop Sexual Harassment in NYC Act requires all private employers, who have 15 or more employees to conduct annual anti-sexual-harassment training for all employees, of all employment levels. The measure was approved by the City Council by a vote of 48-2.
Other bills included in the package will require all employers in New York City to display a city-designed anti-sexual-ha-rassment poster. Another bill extends protections to any employee, regardless of a company’s size, while still another increases the statute of limitations for filing harassment claims to three years from one year.
LEGISLATIVE UPDATE
Protection Against Sexual Harassment In The Workplace
BOARD MEMBERSS. David Belsky – S.D.Belsky AssociatesChair Audit CommitteeJay Holzer – DyckmansRaizy Haas – Extell Development Corp.Matt Selig – Leo IngwerGary Weinshank – DelageYale Zoland – Zoland’sAdnan Aydin – Futurama Jewelry ExchangeJack Elo – The Elo GroupMoris Yero Shalmi – ABCAlon Mor – Mor DiamondsJules Fleischer – Jewelry by AlexanderSammy Abramov – AA PearlMichael Oistacher – Manhattan Gold & SilverIsaac Chetrit – Yadidi GroupSunny Yung – Central Management Corp.Manny Grunberg – M. Grunberg Inc.Memhet Gulay – City Property DevelopmentAdam Abramson – Abramson BrothersEyal Alon – Malca AmitEliot Kirschner – EskayIlan Elishayev – SYU Properties, LLCVincent DeMeo – Valley National BankBrunilda Katsichtis – Premier Realty, Inc.Bill de Blasio – MayorScott Stringer – New York City ComptrollerGale Brewer – Manhattan Borough PresidentKeith Powers – NYC Council MemberJohn Glaister – ResidentReuven Kaufman – Diamond Dealers ClubMichael Toback – MJSADaly Reville – Community Bd. 5
STAFFMichael Grumet – Executive DirectorNatalia Cheviakova – Administrator Director
BOARDOF
DIRECTORS
Business Websites for Jewelers
Yelp (www.yelp.com) has approximately 108 million monthly visitors. It has 42 million reviews. lt is the star of user review websites . Most businesses that use Yelp are restaurants, but service businesses are featured like hair salons and moving companies. Jewelry businesses can get a large number of consumers who read Yelp.
Jewelers can set up a free account, update their com-pany’s description, add photos, and send messages to customers and track their Yelp traffic. Jewelers can com-ment on reviews. Advertising options are also available.
Another website which is valuable to jewelers is Goo-gle Places for Business (google.com/business/places for businesses). On this website you can comment on reviews that disparage your jewelry notices. You can update your listing, add photos and information, all for free. Paid advertising options are available through Google’s AdWords program and you can show discounts to your customers.
The Better Business Bureau (www.bbb.org) is a large source of information for customers who are looking for data about businesses, including jewelry stores. The Better Business Bureau provides customers on line with your jewelry business. Note well that complaints are filed on your listing. Your business may be listed even if you are not a BBB-accredited business. If you get a complaint, you can take it to BBB’s conciliation, mediation or arbitration venues for resolution.
Citysearch (www.citysearch.com) is a website that includes the hospitality industry, but there are listings for service businesses like dentists, construction com-panies and accounting firms. Jewelers can get reviews and business ratings on City Search. Fees are based on numbers of scores the business gets.
Using these websites jewelers can ascertain how many hits their business is getting so that if a website is not producing enough hits to justify the site, the jeweler can erase its name. As with any investment a jeweler can keep it going or stop it depending on results.
DIAMOND DISTRICT MONTHLY JUNE 2018 5
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Pearl Type South Sea Pearl Tahitian Pearl Akoya Pearl Freshwater Pearl
Size Range (Mm) 9~18 9~16 5~11 2~18
Color silky silver to golden natural black classic white white to pink
Price Range (US$)
$1,000 to over $100,000
$500 to more than $25,000
$300 to more than $10,000 $50 to $2,000
Country Indonesia French Polynesia Japan China
Name South Sea Pearl Corp. Ltd
Bora Pearl Farm Japan Atlas Nature
Zhejiang Grace Pearl Jewelry Co., Ltd
Type of Pearl South Sea Pearl Tahitian Pearl Akoya Pearl Freshwater Pearl
Location Buton, South-east Sulawesi
Bora Bora island Shima Peninsula
Zhejiang Province
Type of Company Private Private Private Private
Pearl Price Range
Major Pearl Production Companies from Top 4 Production Countries
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Zero Waste Building Maintenance Training
Investment Update: Using Gold to Hedge Emerging Market Risk
Gold’s Long-Term Performance Compared to Other Financial Assets*
OVER THE LONG RUN, ECONOMIC GROWTH IS A KEY driver of gold demand, especially in emerging market (EM) countries where there is a high affinity for gold as jewelry and investment. At the same time, gold tends to perform well in periods of crisis. Having a strategic position in gold helps improve EM portfolio performance as it can be used to:
• Capture EM upside through gold’s link to rising incomes• Protect against systemic risks, which reduce portfolio
volatility and losses – producing gains in some systemic sell-offs
• Hedge foreign-exchange risk at a lower cost than tradi-tional currency hedges.
40
Ave
rage
Ret
urn
(as
a Pe
rcen
tage
)
20 Year 10 Year 2017
0
30
20
20
-10
U.S. CashU.S. BondsU.S. StocksEAFE StocksEM StocksCommoditiesGold (US$/oz)
8 JUNE 2018 DIAMOND DISTRICT MONTHLY
THIS PROGRAM IS DESIGNED TO HELP BUILDING maintenance staff run an outstanding apartment building recycling program through a combination of classroom in-struction, field trips, and practical activities. FREE training program for NYC apartment building maintenance staff (two 8-hour sessions). Learn how to improve your recycling set-up, how to get residents to recycle, how to avoid fines, and more!
Upon completion, program graduates receive the following:
• Certificate and card signed by the DSNY Commissioner
• Direct communication with DSNY staff
• Fast track for DSNY apartment enrollment pro-grams (refashionNYC, ecycleNYC, and Organics Enrollment)
The two training sessions will take place on June 6th and June 13th. The program is open to all who work in the building maintenance field in a residential building in NYC. If you are accepted into the program, you will receive a confirmation with details about next steps.
DATE AND TIMEWed, June 6, 20189:00 AM – 5:00 PM EDT
LOCATIONNYC Department of Sanitation44 Beaver StreetNew York, NY 10004
For more details you can visit our website at on.nyc.gov/zerowastetraining.
Presented by the New York City Department of Sanitation (DSNY)
* Based on total returns indices including MSCI US, MSCI EAFE, MSCI EM, JP Morgan 3-month US cash, Bloomberg Barclays US Bond Aggregate, Bloomberg Commodity. Gold performance based on the LBMA Gold Price. Data between January 1971 and December 2017. Source: Bloomberg, ICE Benchmark Administration, World Gold Council
DIAMOND DISTRICT MONTHLY JUNE 2018 9
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10 JUNE 2018 DIAMOND DISTRICT MONTHLY
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
Jewelry Category
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ount
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.S. D
olla
rs
711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
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Jewelry Exports to China from U.S.
2014
2015
2016
2014
2015
2016
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
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olla
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711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
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0
Jewelry Exports to Mexico from U.S.
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
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ount
in U
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olla
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711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
1,000
0
Jewelry Exports to Italy from U.S.
2014
2015
2016
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
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ount
in U
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olla
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711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
1,000
0
Jewelry Exports to Thailand from U.S.
2014
2015
2016
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
Jewelry Category
Am
ount
in U
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olla
rs
711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
1,000
0
Jewelry Exports to China from U.S.
2014
2015
2016
2014
2015
2016
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
Jewelry Category
Am
ount
in U
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olla
rs
711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
1,000
0
Jewelry Exports to Mexico from U.S.
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
Jewelry Category
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ount
in U
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olla
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711320JEWELRY AND PARTS THEREOF,
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1,000,000
1,000
0
Jewelry Exports to Italy from U.S.
2014
2015
2016
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
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ount
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olla
rs
711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
1,000
0
Jewelry Exports to Thailand from U.S.
2014
2015
2016
China is the #11 best export market for jewelry in the U.S. Chart #1 shows the trend in jewelry exports to China from the U.S. over the last three years. Export of gold and platinum precious metal jewelry has stayed stable over the last three years. Export of silver went up in 2016 after
being stable for the two years prior. Finally, exports of clad metal jewelry plated with precious metals have not been stable at all with the export levels dramatically increasing in 2015 and then decreasing again in 2016.
Mexico is the #12 best export market for jewelry in the U.S. Chart #1 shows the trend in jewelry exports to Mexico from the U.S. over the last three years. Export of gold and platinum precious metal jewelry has stayed stable over the last three years. Export of silver went up in 2016 after
being stable for the two years prior. Finally, exports of clad metal jewelry plated with precious metals have not been stable at all with the export levels drastically decreasing each year since 2014.
Top Global Jewelry Export Markets (#11-14)
#11 China
#12 Mexico
FINEJEWELRYMARKET
DIAMOND DISTRICT MONTHLY JUNE 2018 11
Italy is the #13 best export market for jewelry in the U.S. Chart #1 shows the trend in jewelry exports to Italy from the U.S. over the last three years. Export of gold and platinum precious metal jewelry has slightly decreased
each year since 2014. Export of silver has been relatively stable of the last three years. Finally, exports of clad metal jewelry plated with precious metals had a slight decrease in 2015, but in 2016 experienced a major decrease.
Thailand is the #14 best export market for jewelry in the U.S. Chart #1 shows the trend in jewelry exports to Thailand from the U.S. over the last three years. Export of gold and platinum precious metal jewelry has been stable over the last three years. Export of silver has been
relatively stable besides a slight increase in 2016. Finally, exports of clad metal jewelry plated with precious metals had a slight decrease in 2015, but in 2016 experienced an increase again.
#13 Italy
#14 Thailand
FINEJEWELRYMARKET
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
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ount
in U
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olla
rs
711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
1,000
0
Jewelry Exports to China from U.S.
2014
2015
2016
2014
2015
2016
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
Jewelry Category
Am
ount
in U
.S. D
olla
rs
711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
1,000
0
Jewelry Exports to Mexico from U.S.
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
Jewelry Category
Am
ount
in U
.S. D
olla
rs
711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
1,000
0
Jewelry Exports to Italy from U.S.
2014
2015
2016
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
Jewelry Category
Am
ount
in U
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rs
711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
1,000
0
Jewelry Exports to Thailand from U.S.
2014
2015
2016
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
Jewelry Category
Am
ount
in U
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olla
rs
711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
1,000
0
Jewelry Exports to China from U.S.
2014
2015
2016
2014
2015
2016
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
Jewelry Category
Am
ount
in U
.S. D
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rs
711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
1,000
0
Jewelry Exports to Mexico from U.S.
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
Jewelry Category
Am
ount
in U
.S. D
olla
rs
711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
1,000
0
Jewelry Exports to Italy from U.S.
2014
2015
2016
1,000,000,000
711319JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
711311JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
Jewelry Category
Am
ount
in U
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711320JEWELRY AND PARTS THEREOF,
OF OTH PRECIOUS METAL
1,000,000
1,000
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Jewelry Exports to Thailand from U.S.
2014
2015
2016
12 JUNE 2018 DIAMOND DISTRICT MONTHLY
40+ COMPANIES • 100’S OF JOBS • COACHINGFIND JOBS. MAKE CONNECTIONS.
FREE ADMISSIONJavits Center, 1E Hall • Friday, July 13, 2018
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CF180020_NY_DDN_CF_Ad_v3.indd 2 5/18/18 2:11 PM
The deployment of solar panel technol-ogy has led to an increased demand for
this precious metal.China has revealed a plan to create 100
massive 250 acre solar farms. This could mean that China will consume one half of an entire year’s worth of silver production.
Technology ’s increasing demand for silver means that there will not be enough silver to go around. Due to the law of supply and demand this will cause the price of silver to increase.
As the demand for silver increases the exploration for silver will also increase, but we do not know if new silver sources will be found.
This will likely cause an increase in the price of metal near and dear to every jeweler in the Diamond District.
Technological Demand Can Potentially Cause a Rise in the Price of Silver
continued from page 1
DIAMOND DISTRICT MONTHLY JUNE 2018 13
more M/WBE companies hired as sub-vendors. By publishing our performance today, we’re more likely to see better results tomorrow.”
Checkbook NYC is a first-of-its-kind online transparency tool that provides up-to-date infor-mation about the City’s finances. The updates announced today by Comptroller Stringer are the third update to Checkbook NYC since he took office. Previously, the Comptroller’s Office added data from the City’s Economic Devel-opment Corporation and included
information about minority- and women-owned businesses.
Now, Checkbook NYC’s sub-ven-dor dashboard will include addi-tional information such as:
• A widget outlining the num-ber of contracts Citywide that require sub-vendor data to be reported and, if such a requirement exists, if the data has been submitted;
• A s e c o n d w i d g e t s h o w -i n g h ow m a ny p ro p o s e d s u b - v e n d o r s h a v e b e e n a p p rove d o r re j e c t e d b y
agencies’ chief contracting officers, across the entire City;
• H o w m a n y p r o p o s e d sub-vendors are at each stage of the approval process at each agency; and
• How many sub-contracts have been entered into by prime vendors by agency.
Each specific contract page with reported sub-vendors will also outline if the proposed sub-ven-dor has been approved, is being reviewed, or has been rejected.
Comptroller Stringer Announces New Transparency Tool for Checkbook NYC
14 JUNE 2018 DIAMOND DISTRICT MONTHLY
47TH STREET BID SEMINAR SERIES
Major Components of Corporate Tax Reform• Enacted December 22, 2017• Top tax rate reduced from 35% to flat 21% rate• Changes to contributions to capital and dividends
received deduction • - DRD Change from 80% and 70% to 65% and 50% • Repeal of alternative minimum tax• Corporate net operating losses (80% NOL limitation)• - Repeals 2 year carryback and expands to
unlimited carryforward• Reduced Rate for Pass-Through Entities• - Deduct 20% of taxpayer’s qualified income• Bonus depreciation to full expensing for five years• One time Repatriation Tax between 8% – 15.5%• Repeal of Section 199 deduction• International provisions
Impact on Pass-Through Businesses• Pass-through business not availed of reduced 21% tax
rate – instead pay tax at marginal rate of shareholders (top rate 39.6% for individuals)
• 20% Deduction from qualified business income• Qualified business income includes income, gain, de-
duction, and loss from a qualified trade or business• Limitations:
» Taxable income limitations - $157,500 single or $315,000 MFJ
» Deduction limited to Greater of 50% owners alloca-ble share of W-2 or 25% of W-2 plus 2.5% of original cost basis of qualified property
» Disqualified businesses include health, law , ac-counting, actuarial services, performing arts, consulting, athletics, financial services, brokerage services, investing, trading, or trade of business where the principal asset is the reputation or skill of one or more of its employees or owners
Limited Liability Corporations and S Corporations• LLC can take advantage of the pass through business
rate• S corporation conversion to C Corporation has some
minor tax relief, and can spread unfavorable section 481 adjustments over 6 years instead of 4
Financial Statements:2017 Current Tax Impact• Pro rata enactment – bifurcated tax rate for fiscal year
taxpayers
• Hard close as of 12/31/2017• Deemed repatriation toll charge• Many of the provisions take effect as of 1/1/2018, so
2017 impact may be muted• 100% Bonus depreciation changes take effect for assets
placed in service after 9/27/2017 and before 1/1/2023
Financial Statements:Deferred Tax Impact• Revaluation of deferred taxes
» New rate » Impact of repealed provisions » Tax credits » Net operating losses
• Impact on valuation allowance
Meals & Entertainment• Meals
» Business-related meals still subject to 50% disallow-ance
» Meals provided for convenience of the employer:* Previously 100% deductible* Beginning in 2018 subject to 50% disallowance* Deduction eliminated in 2026
• Entertainment » Repeals 50% deduction for entertainment expenses
after 12/31/2017• Practical tip: If not already in place, trial balance will
need separate accounts for business meals, employee meals, work-related events, and entertainment
Deferred Revenue• Rev. Proc. 2004-34 codified into Section 451• Advance receipts doctrine• Treasury given authority to determine how and when
the election is made• Once the election is made, it becomes a method of
accounting that must be used for all subsequent years• Overrides any deferral method provided by Reg. Sec.
1.451-5 relating to advance payments received for goods
Net Operating Losses• For losses arising in taxable years beginning after
12/31/2017: » 80% limitation on losses (without regard to deduc-
tion) » Elimination of 2 year NOL carryback » Carryforward period will be unlimited
Impact of Tax Reform on Your Business TAXTIPS
DIAMOND DISTRICT MONTHLY JUNE 2018 15
Repatriation Income (NY & NYC)• New York State and New York City utilize federal taxable
income before net operating losses and special deduc-tions as their starting points, on a rolling basis. Thus, federal changes that affect income similarly impact NY and NYC calculations.
• The repatriated income is potentially deductible as “Exempt CFC Income,” which includes IRC §951 income received from a unitary corporation that is excluded from a combined report.
• The NY deduction requires that the foreign payer be unitary with the US entity. There is some suggestion in other provisions of the NY tax law, that a corporation that is at least 20% owned may be treated as unitary.
• Actual distributions of previously taxed Subpart F in-come that is excluded from federal taxable income as PTI should be followed by NY due to the federal conformity.
• Regarding actual dividends of post 2018 foreign E&P, NY has its own very limited DRD provisions so its not likely that the state will adopt IRC §245A for foreign dividends.
• However, a NY deduction for “exempt unitary dividends” might apply. The taxpayer would have to be unitary with recipient to qualify. Similar to the repatriation, for this purpose, there may be an argument that the normal greater than 50% ownership unitary test is not required.
• Another possibility is that actual dividends can be de-ducted under NY’s “investment income” provisions.
• Another consideration is that interest directly or indirect-ly attributable to exempt CFC income, exempt unitary dividends and/or investment income must be added back. There is a 40% safe harbor addback allowed.
• NY does not have any provisions permitting a deferral of the payments of the liabilities resulting from the repatri-ated income.
• Because New York utilizes federal income as a starting point on a rolling conformity basis, it appears NY & NYC will both adhere to the limitations on interest deductions.
Increased Expensing of Business Assets (NY & NYC)• New York/New York City – NY & NYC have already de-
coupled from the federal bonus depreciation provisions (except for in certain designated Resurgence or Liberty Zones), and it is anticipated will continue this treatment.
• However, NY & NYC have not decoupled from IRC §179 treatment. Therefore, absent additional legislation on this point, it appears the increased deduction under §179 will be permitted for New York purposes (except with regards to certain sport utility vehicles).
QBI (NY & NYC)• New York/New York City – The federal deduction is
allowed as a deduction against federal taxable income, but is not allowed as a deduction in computing federal adjusted gross income.
• For personal income tax purposes, New York State starts with federal adjusted gross income (not federal taxable income). As a result, the QBI deduction should not be allowed for New York personal income tax purposes.
• NOTE: A position may exist to deduct the QBI deduc-tion under N.Y. Tax Law Sec. 615, which allows resident individuals who itemize federal deductions to itemize deductions, defined as “deductions from federal adjust-ed gross income.”
Bonus Depreciation - PIT (NY & NYC)• New York/New York City – For personal income tax
purposes, New York State decoupled from IRC Section 168(k), except for certain designated zones (Liberty/Resurgence) in New York. New York State follows the federal deduction under IRC Section 179, except with respect to certain sport utility vehicles.
• The New York City personal income tax and New York City Unincorporated Business Tax consequences should follow the New York State consequences.
Repatriation – PIT (NY & NYC)• For New York State personal income tax purposes, the
amount of repatriated income included in federal ad-justed gross income should also be included in the New York tax base. It is expected (but uncertain) that New York would follow both the inclusion of the income and the related deduction portions of IRC Section 965.
• The New York City income tax consequences should follow the New York State consequences.
• The New York City Unincorporated Business Tax consequences should follow the federal consequences because of the conformity to the federal definition of taxable income.
• With respect to the deferral of the deemed repatriation for S corporation shareholders, it is expected that New York State and New York City would conform to the federal deferral of the recognition of income given the conformity to federal adjusted gross income.
• It is expected that New York State and New York City will not allow the deferral of payment of tax related to the federal inclusion.
Tax Cuts & Jobs Act: Impact on State and Local Tax
TAXTIPS
580worlddiamondtower.com
Officially approved as aForeign Trade Zone (ftz)
family owned and operated for over 60 years
Undergoing a $50 millionCapital Improvement Program
Arthur J. Margolin & Kenneth F. KahnEXECUTIVE MANAGERS
