The Senate Finance Committee on November 9, 2017, released a detailed description of its forthcoming tax reform bill.

Key business provisions in the Senate bill include:

— Reducing the 35% corporate income tax rate to 20% beginning in 2019 (versus 2018 in the House bill) and repealing the corporate alternative minimum tax (AMT), beginning in 2018 (same as the House bill)

— Modifying the current worldwide taxation system to exempt from US tax dividends from foreign subsidiaries paid from foreign earnings

— Imposing a one-time transition tax on deferred foreign earnings that is calculated differently than under the House bill

— Repealing the DISC and IC-DISC regimes

— Allowing businesses to expense the cost of certain new property placed in service after September 27, 2017, and before January 1, 2023 (same as the House bill)

— Limiting deductions for "business interest"

— Eliminating various deductions and credits, such as the Section 199 domestic production deduction

— Allowing certain pass-through business owners to deduct 17.4% of "domestic qualified business income" (House bill would limit the tax rate applied to a portion of a pass-through entity's business income to 25%)

— Subjecting nonqualified compensation to current taxation once it is no longer subject to substantial risk of forfeiture (House bill would not change current tax treatment of nonqualified deferred compensation)

Key individual taxpayer provisions in the Senate bill include:

— Modifying the current seven income tax brackets for individual taxpayers to rates of 10, 12, 22.5, 25, 32.5, 35 and 38.5 (the House would replace the current rates with four rates of 12%, 25%, 35% and 39.6%)

— Repealing the individual AMT

— Retaining the current deduction for interest on mortgages of $1 million or less, (limited to interest on new home mortgages of $500,000 or less under the House bill)

— Eliminating the individual itemized deduction for state and local taxes (limited to $10,000 in property taxes under the House bill)

— Retaining the estate tax, which the House would repeal in 2023, but doubling the exclusion and adjusting it for inflation

On the House side, the House Ways and Means Committee passed the Tax Cuts and Jobs Act by a vote of 24-16. The bill includes amendments that would:

— Increase the proposed one-time transition tax to 14% from 12% for accumulated foreign earnings and to 7% from 5% for illiquid assets

— Eliminate prior amendments designed to lessen the effects of the new excise tax on certain payments from a domestic corporation to a foreign affiliate

— Eliminate proposed increases in dividends received deduction rates

— Require certain research or experimental expenses to be capitalized over five years

— Eliminate a proposal to subject a passive partner's distributive share of partnership income to self-employment tax

Tax Alerts on these developments are forthcoming.

Plan to attend Policy Perspectives: Ernst & Young LLP’s rapid response to the Senate Finance Committee's tax reform plan today, November 10 at 2 p.m. ET. Join EY National Tax Co-Director Michael Mundaca, along with EY's Anna Voortman, Cathy Koch and Gary Gasper, for a rapid response discussion of the plan and what to expect next as the debate unfolds.

Click here to register for the audio webcast, which can be streamed from devices with internet connectivity.