Pub. 6 2017 Issue 7

October/November 2017 31 l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s from passthrough entities would presumably be taxed as a dividend) • Repeal the 3.8 percent net investment income tax and the alternative minimum tax • Eliminate all itemized deductions except mortgage interest and charitable contributions For C corporation banks: • Reduce corporate income tax rates to a flat 15 percent • More generous expensing of capital assets (while not specifically addressed in Trump’s April 26 proposal, allowing “unprecedented capital expensing” was included in the July 27 Joint Statement on Tax Reform issued by Republican leaders in the White House and Congress) • Eliminate alternative minimum tax Kansas Tax Law Changes for 2017 Kansas House Bill 2117, which passed in 2012, made significant changes to tax policy beginning in 2013. The most notable change was that passthrough income reported on federal Schedules C, E and F was tax-exempt. The overturned veto of S.B. 30 ended this exemption and implemented other changes, including: • Repealed exemption of certain types of income, including Schedule C (business income), Schedule E (rental income and income from passthrough entities such as S corps, partnerships, estates and trusts) and Schedule F (farm income) • Increased individual tax brackets from the 2.7 percent and 4.6 percent brackets in 2016, as follows: ◦ Tax year 2017 – 2.9 percent, 4.9 percent, 5.2 percent Tax year 2018 – 3.1 percent, 5.25 percent, 5.7 percent • Gradually increased allowable Kansas itemized deductions for medical expenses, mortgage interest and real estate/personal property taxes after 2017 These changes were enacted retroactively to the beginning of 2017. Taxpayers won’t be charged penalties and interest for underpayment of estimated taxes associated with these changes for the 2017 tax year, as long as all tax due is remitted by April 17, 2018. Although these changes will affect many Kansas bank shareholders, the tax treatment of bank S corp earnings in Kansas will remain consistent with prior years. Banks will continue to file and remit taxes on Form K-130, Kansas Privilege Tax Return. Bank shareholders will still receive a deduction for earnings taxed on Form K-130. This article is for general information purposes only and is not to be consid- ered as legal advice. This information was written by qualified, experienced BKD professionals, but applying this information to your particular situation requires careful consideration of your specific facts and circumstances. Consult your tax advisor or legal counsel before acting on any matter cov- ered in this update. Article reprinted with permission from BKD, LLP, bkd. com. All rights reserved.