Following the Republican victory in the 2024 election and the reelection of President Donald Trump, tax reform and political changes are at the forefront of every accountant’s agenda. 

The inauguration of Trump signals a dramatic shift in the tax landscape, with significant reforms expected to impact businesses and individuals. Accountants must remain vigilant, understanding how proposed changes may affect their clients and their own advisory strategies. 

Tax considerations for construction project timing

Accountants must carefully evaluate how potential tax reforms under Trump’s presidency could affect the timing of taxpayer construction projects. Trump has expressed potential intent to cut Inflation Reduction Act spending and to roll back President Biden’s climate and energy policies. Changes to IRA credits, particularly those tied to renewable energy and infrastructure investments, may alter their availability or size, prompting the need for accelerated project completion to maximize benefits before credits phase out. 

Potential tax change: For qualified assets, 100% accelerated bonus depreciation may return. Currently, the ability to claim a full depreciation deduction is being phased down and will be eliminated for most properties placed in service starting in 2027.

Adjustments to the bonus depreciation rates could provide further incentives to change the timing of construction projects, allowing taxpayers to take advantage of expanded accelerated depreciation for such projects in the future. Additionally, accountants should help clients weigh the trade-off between immediate cash tax savings from deductions, such as accelerated depreciation, and the long-term value of tax credits. 

Accountants and taxpayers should weigh the potential for changes to existing credits and future depreciation rates and model these scenarios when considering the timing of substantial construction projects.

Considerations for business entity selection and pending tax reform

Proposed changes, including a reduced corporate tax rate, raise critical questions about entity selection and tax structure. 

Potential tax change: Trump has proposed decreasing the corporate tax rate from 21% to 20%, and potentially to as low as 15% for companies that manufacture in the U.S.

The possibility of a flat 15% corporate tax rate has significant implications. Accountants should evaluate the tax impact of potential changes to the corporate tax rate when reviewing current pass-through entity tax structures and consider the total effective tax rate and other compliance issues.  For example, lower corporate federal rates may offset the complexity of state taxes with varying pass-through entity tax regimes.  Additionally, pass-through owner capital gains rates — including the net investment tax, potential limitations on deductions such as pass-through owner health insurance expenses, and payroll taxes, among other tax considerations — may necessitate a closer look at current tax entity selections.

The tax rate implications above also must factor in Section 199A, which offers a 20% deduction for qualified business income. Personal rate adjustments could affect the overall value of the deduction. Clients engaged in specified service trade or business activities generally are excluded above certain income thresholds. Those businesses that are not included in the SSTB category still must satisfy certain W-2 wage and or basis in property metrics to claim the deduction.

Tax reform hurdles: Political and policy challenges

The path to tax reform is full of obstacles that could shape the timing and substance of the legislation. A single comprehensive bill may face greater political resistance but offers holistic reform, while dividing reform into smaller bills could address priorities piecemeal but delay broader implementation.

Potential tax change: Trump indicated that he would reverse a provision of his 2017 tax cut package that limited Americans’ ability to deduct state and local taxes on their federal returns.

Negotiations around the state and local tax deduction are an example of policy differences that could shape both the legislation but also the timing. Beyond the political debate, reconciliation rules limit provisions to those directly affecting the federal budget as well as other limitations.  Certain items on the tax reform agenda could be limited by the budget reconciliation process.  Lastly, shifts in Congressional Budget Office scoring methods may impact tax reform dynamics.  

Tax planning for a decreasing rate environment

A reduction in corporate tax rates offers planning opportunities and challenges. Accountants should model scenarios to recommend strategies to defer income or accelerate expenses to take advantage of rate reductions. Timing differences, such as accelerated deductions or deferred income recognition, can create permanent tax savings in changing rate environments.

Accountants must consider the impact of these adjustments on financial statements. Accountants should prepare for the revaluation of deferred tax assets and liabilities under new tax rates and communicate potential impacts on earnings and disclosures to stakeholders.  Additionally, timing considerations will be at the forefront as the enactment date of potential future legislation will need to be considered for financial statement purposes.  

Opportunities for accountants

The shifting tax landscape following the presidency of Trump presents numerous opportunities and challenges for tax professionals. By adopting a proactive, advisory-focused approach, accountants can add significant value to their clients. By not only understanding the intricacies of new tax laws but also providing strategic tax planning that aligns with clients’ financial goals.

German prosecutors are preparing to bring the first criminal charges against staff who worked at Macquarie Group Ltd. over the Cum-Ex tax scandal, in a signal that officials are ramping up their years-long probe.

Prosecutors based in Cologne plan to initially charge a few of the bankers who were working at the lender before 2012 when the trading occurred, according to people familiar with the matter. Macquarie has previously said that as many as 100 people were swept up in the probe.

A spokesman for Cologne prosecutors confirmed that they’re planning to issue new indictments but declined to disclose the names or banks involved. Macquarie declined to comment.

Cum-Ex was a controversial trading strategy designed to obtain duplicate refunds by taking advantage of how dividend taxes were collected. Germany stopped the practice in 2012 and is now probing about 1,800 suspects from across the global financial industry. More than 20 people have been convicted in German courts for their part in Cum-Ex. 

Investment bankers at Macquarie’s London office were central to Cum-Ex deals and have been in prosecutors’ cross-hairs for years. In the fallout from the scandal the lender has already settled two separate matters involving German dividend trades between 2006 and 2009. The bank paid €100 million ($105 million) to German authorities as part of this agreement.

The number of suspects in the German Cum-Ex probes linked to Macquarie has continually increased. In 2018, Macquarie said about 30 staffers were targeted. In 2020, the bank disclosed that the number had climbed to 100, most of whom are no longer at Macquarie. In a 2024 company report, the bank reiterated that number, adding that the lender has provided for financial risks out of the case.

Under German law, companies can’t be charged with crimes but prosecutors can use a related form of proceeding to add them as parties to criminal cases. That is how investigators targeted VW, when the automaker settled with prosecutors over the diesel scandal for €1 billion in 2018. 

British hedge fund trader Sanjay Shah was sentenced to 12 years in prison by Danish judges in December for orchestrating the same scam in Denmark, the heaviest jail term handed down so far in Europe.

Charges against Macquarie bankers have been expected for years but Cologne prosecutors repeatedly delayed decisions. The pandemic slowed law enforcement on multiple fronts, including reduced court capacity. 

However, the Cologne prosecutors office, which is investigating suspects in 130 different probes, has also struggled with its own work management. This week Tim Engel, the new head of Cum-Ex prosecution, told reporters this broad approach is taking a toll on investigators who have to wade through enormous amounts of seized documents.

After more than a decade of investigations, Cologne prosecutors are now also facing the prospect of running out of time to prosecute, at least in some of their cases. But only very few proceedings against individual suspects will have to be dropped completely, Engel said.