February 13, 2013 11:21 am

State of the Union and Tax Reform

In his annual State of the Union Address on February 12, 2013, President Obama called for tax reform. In particular, he urged corporate tax reform and simplification to help small businesses. And he mentioned elimination of tax loopholes.

He did not specify what a revised tax code would look like and did not name which loopholes should be eliminated. (In the past, discussions on so-called loopholes have included the exclusion for employer-provided health coverage and the deduction for home mortgage interest.) However, material released by the White House in conjunction with his address included making the research credit for businesses permanent and added a new corporate tax on offshore earnings.

Historically, the first year of a president’s second term is the best time for tax reform. This year fits the bill, but we’ll have to wait to see whether Congress cooperates.

advertisement
Tax Glossary

Adjusted basis

A statutory term describing the cost used to determine your profit or loss from a sale or exchange of property. It is generally your original cost, increased by capital improvements, and decreased by depreciation, depletion, and other capital write-offs.

More terms