John A Gacinski CPA

ADM CPA SERVICES ANCIENT OF DAYS ADVISORS INC. RECOVERY FINANCIAL

To: Our Clients

From: JAG

Date: December 5, 2017

Re: Monthly Client Letter- December 2017

TAX REFORM IS (ALMOST) HERE.

It is Christmastime and the Congress is giving the gift of tax reform, as both have
passed their proposals. Now their proposals will head to a conference
committee, where a unified bill will be completed. The following summarizes
where we stand with some of the provisions likely to impact our clients. Note
that unless noted, the agreed-upon reforms would not take place until 2018.

Individual ordinary income tax rates:

Current: There are 7 brackets, with rates ranging from 10% to 39.6%.
The top tax rate applies to taxable income in excess of $470,700
($418,400 for singles)

House proposal: 4 brackets, with rates ranging from 12% to 39.6%. The
top rate applies to taxable income over $1 million ($500,000 for singles).
There is a bubble tax to recapture the lower rate that kicks in at $1.2
million ($1 million for singles)

Senate proposal: 7 brackets, with rates ranging from 10% to 38.5%. The
top rate applies to taxable income over $1 million ($500,000 for singles)

450 SUNRISE HIGHWAY, SUITE 2H, ROCKVILLE CENTRE, NY 11570

631-813-0772 CELL/516-366-1326 OFFICE
GACINSKI.COM

Child credit:

Current: there is a $1,000 credit per child under age 17 and that credit
begins to get phased out at $110,000 ($75,000 for singles) of Adjusted
Gross Income.

House proposal: credit increased to $1,600 per child under age 17. The
credit begins to get phased out at AGI of $230,000 ($115,000 for
singles).

Senate proposal: credit increased to $2,000 per child under age 18. The
credit begins to get phased out at AGI of $500,000 for all taxpayers.

Alternative Minimum Tax. This tax is an alternative method of
computing tax for individuals and disallows deductions such as state,
local and real estate taxes. This tax was long overdue for an overhaul as
middle-income taxpayers were finding themselves subject to it.

House proposal: AMT is completely repealed.

Senate proposal: The AMT exemption, currently at $78,750 ($50,600 for
singles), is increased to $109,400 ($70,300 for singles). This exemption is
phased out at a higher level of AMT taxable income.

Personal exemptions:

Current: A $4,500 personal exemption is allowed for each taxpayer,
spouse and dependents. This deduction is phased-out at AGI of
$313,800 ($281,500 for singles).

House proposal: the deduction for personal exemptions is completely
repealed.

2
 Senate proposal: the deduction for personal exemptions is completely
repealed.

Standard Deduction. This is a fixed amount that is deducted from
Adjusted gross income. Taxpayers who do not itemize their deductions
take the standard deduction.

Current: The current exemption amount is $13,000 ($6,500 for singles).

House proposal: standard deduction amount is raised to $24,000
($12,000 for singles).

Senate proposal: standard deduction amount is raised to $24,000
($12,000 for singles).

State and local taxes:

Current: fully deductible.

House proposal: not deductible.

Senate proposal: not deductible.

Real Estate taxes:

Current: fully deductible.

House proposal: deductible up to $10,000.

Senate proposal: deductible up to $10,000

3
 Mortgage interest:

Current: interest on mortgage debt up to $1.1 million is deductible, for
both first and second homes.

House proposal: interest on debt up to $500,000, for loans after
November 2, 2017. Prior debt is grandfathered in. Interest on home
equity loans is not deductible.

Senate proposal: only change is the disallowance of interest on home
equity debt.

Pass-through income. This is income that is passed through from a
partnership, S corporation or limited liability company.

Current: this income is taxed at the recipients tax rate.

House proposal: taxes this income at a top rate of 25%.

Senate proposal: the first 23% of this income is exempt from tax; the
balance is taxed at the recipients tax rate.

Corporate tax rates:

Current: C corporations pay taxes at rates ranging from 15% to 39%.

House proposal: corporate tax rate is 20%.

Senate proposal: corporate tax rate is 20% but beginning in 2019.

Estate tax.

Current: an exemption of $5.49 million is available and estates in excess
of this amount are taxed at 40%.

4

House proposal: The exemption is increased to $11.2 million and the
portability rules remain in place.

Senate proposal: Matches the House proposal.

Gift tax.

Current: gifts in excess of the lifetime exemption amount are taxed at
40%.

House proposal: gift tax rate is lowered to 35%.

Senate proposal: no change to the current law.

Real property depreciation.

Current: residential real estate is depreciated over 27.5 years;
nonresidential real estate is depreciated over 39 years.

House proposal: No change to current law

Senate proposal: both types of property are depreciated over 25 years.

Accelerated depreciation.

Current: businesses can deduct up to $500,000 of the cost of qualified
property. This is scheduled to phase out to 0% by 2020.

House proposal: deduction of 100% of the cost of qualified property
placed in service from 9/27/17 to 12/31/22.

5
 Senate proposal: deduction of 100% of the cost of qualified property
placed in service from 9/27/17 to 12/31/22.

I would be happy to discuss the proposed changes and how they may impact
you and your businesses.

Other news

In other news, the firm website is now up and running. The address is
Gacinski.com (creative, I know). My email address is JAG@Gacinski.com though
I will continue to receive mail at johngacinskicpa@gmail, the address youre
accustomed to.

Our firm has become a partner in the Xero software network. We have been
evaluating accounting software, with an eye towards giving our clients full online
access to their records. Transparency is very important to us, as is ease of use,
and its always our goal to empower our clients as much as possible. We believe
that Xero will play an important role in achieving this goal. Ill reach out to each
of you regarding next steps.

Lastly, we would like to wish you and your loved ones a Merry Christmas, a
Happy Hanukkah and a Happy 2018. We wouldnt be here without you and we
are grateful for your confidence and friendship. We look forward to a
prosperous, productive and peaceful new year.