Guys, make sure you're on mute, I mean, you're a computer speaker. Yep. Thanks. Yep. Okay. Hello, everybody. Good morning, and welcome to the Dealer Tax Opportunities for 2017 webcast. We're excited to be with you. As way of background, my name is Pat Mahoney, and I'm a tax partner at PwC. I reside in our Detroit, Michigan office. For those of you that don't know PwC, PwC is a global professional services firm specializing in audit, advisory, and tax services. But mainly, we see our purpose as helping our clients solve their important business, regulatory, and compliance issues. PwC has offices all over the U.S. and globe to help deliver on that purpose. My area of tax specialization is like-kind exchange tax deferral, or Section 1031. Like-kind exchange allows taxpayers with homogeneous fleets of assets, like equipment dealers, to defer tax gain on a disposition of their leasing or rental fleet assets. PwC is the leading LKA service provider in the country and a preferred provider for the AED members, which is something that we're very proud of. We're very excited about our continued relationship with AED. We work closely. We have a great agenda for you, which I'll go over in a minute. But our LKA practice works really closely with our national office to make sure we stay abreast of tax reform and where that's going. LKA is going to be one of the planning ideas we talk about, and that's why I'm on the phone. But it's not the only topic, and there are some other really important topics that we're going to address. And that's why I'm joined by my colleague from PwC, Tom McCar. Tom, do you want to give a brief background on yourself, and then we can let Brian introduce himself as well? Yep. Okay. Thanks, Pat. And hello, everyone. Thank you for joining. This is Tom McCar. I'm a tax partner with PwC. I've been with the firm for 26 years now. I reside out of the Minneapolis-St. Paul office. And I work in our private company services practice, and I have a number of equipment dealer distributors as clients, and very familiar with some of the tax matters that arise in your industry, and very excited and looking forward to speaking to you on this webcast. Brent? Yeah. Good morning. This is Brent Abram, CEO of Accruit. We've been involved and actually members with EAD since about 2001 and involved in offering up like-kind exchange programs to the members. Accruit is what they call a qualified intermediary who's a requirement in a 1031 to help facilitate the exchange. So been a long-time member with EAD and thrilled to be working with PwC on a broader offering out to the members. So thanks for including us. Great. Thanks, everybody. So, Craig, if we flip to the agenda, as I said, we're really excited to be with you. We've got a fairly full agenda. We expect to take about an hour. The first topic is tax reform. So we know this is a really hot topic and one that's garnered a lot of interest in the media and headlines. It's been interesting. For most of my life, I've been kind of a boring person. No one's been very interested to hear about all the complex areas of tax that I'm so interested in. But for the last 18 months or so, all of a sudden, my topics of conversation have become interesting. So it's been fun to be in the tax area and to be able to talk about topics that are kind of right on the top of people's minds. From there, we are going to move into some recent changes to tax law that sort of established or paved the way for what we see as this comprehensive tax reform that's coming down the pike. And then we'll spend probably the final 30 minutes. So those first couple topics will be a little bit brief, and then we'll spend the final 30 minutes of the call with Tom talking about the different planning ideas that may be available to taxpayers. So we move on to the next slide, tax reform. So what I would say here is that, you know, amongst tax professionals, we've been thinking about the possibility of tax reform for probably the last three or four years. Those who have kind of studied tax law history have seen that over – since the inception of an income tax in the U.S., we have generally seen significant reform just about every 30 years. So the first real income tax – recognized income tax in the U.S. was around 1913, and then the first revision came in 1954, so almost 40 years later. The next revision was in 1986, exactly 31 years later. And now we're looking at 2017, and it feels about time. The code has become cumbersome, overly cumbersome, overly complex, hard to administer, and we really need to make some changes. Now, with all that being said, until the election last fall or winter, most people didn't really think comprehensive tax reform could occur. We felt pretty strongly that with all the partisanship in Congress and the executive branch, that it would be hard to make meaningful, you know, movement on comprehensive tax reform. But then, as we all know, we – the election occurred, and we have a new president, and from that point forward, the prevailing belief was that we could have comprehensive tax reform despite the partisanship that existed in Congress. Because of the – as you all know, because we have a majority of Republicans in both the House and Senate and a Republican in the executive branch, there's a real feeling that we can kind of get comprehensive tax reform done without the necessity of including the Democrats. But at the same time, because of that, it seems like it's becoming a bipartisan effort at this point. So, with that as kind of a little bit of a backdrop, I would say if we move on to slide five, the big six unified framework on tax reform. So, you know, this is the latest insight that we have as to what tax reform could look like. And I should have mentioned, y'all, at the beginning, there is an area where you can ask questions, post questions. If there's anything that comes up during the conversation that you'd like us to expand on within the framework of the webcast, you can post questions to the ask questions section on your left, and we'll try to address those timely. But here on slide five, we've got this unified framework, and this is the latest insight that we have from the lawmakers on what a comprehensive tax reform could look like. The unified framework on tax reform was released on September 27, 2017. That may work out to be an important date for certain provisions. As we look at the framework, it doesn't look significantly different, I would say, than the principles, which were, you know, kind of a one-page document that were issued earlier this summer. And also, it's very similar, I would say, as well to what President Trump campaigned on. There are some nuances and some differences, but still kind of aligned with his general campaign policy related to tax reform. Simplification, reduce the rate. But I'm just going to run through those topics. You know, before I do, though, I should highlight these big six. So, these should be all familiar individuals. So, within the Trump administration, we've got Treasury Secretary Mnuchin and then NEC Director Cohn. Right now, the biggest burden is with the House of Representatives and really with Chairman Brady of the Ways and Means Committee. They are the ones that are going to be working on taking this framework and formalizing a chairman's draft. But more to come on that in a moment. Speaker Ryan, obviously, involved, was a champion of this in his previous role. And then from the Senate, obviously, whatever comes out of the House will have to get through Senate, and that's where we will be running into Majority Leader McConnell and Chairman Hatch. These individuals you may have heard referred to over the past three or four months as the big six who have been contributing to this initiative around comprehensive tax reform. So, with that being said, you know, the big ticket items that were released in the unified framework included a significant rate reduction, corporate rate reduction, from 35% to 20%. Also, pass-through rate reduction to 25% and a goal to eliminate the corporate AMT. Further, 100% dispensing, expensing, I'm sorry, of depreciable assets other than structures for at least five years. That one would, that 9-27-17 date may be important at some point. It may be as of that date if enacted. A partial limit on deductions for net business interest expense incurred by C-Corps. So, this could have a really big impact on companies' borrowings. 100% dividend exemption system with one-time mandatory repatriation and anti-abuse rules. Repeal or restriction of deductions, credits, and exclusions, including Section 199. So, generally the concept here is if we're getting to this 20% rate, we don't need as many special exceptions. 191, 199 is one that was specifically identified. That being said, there were some that were preserved. Low-income housing tax credit and R&D are amongst them. And then a modernization for special tax rules. That one was kind of broad. Generally, the concept being that we don't want to, you know, try to avoid picking winners and losers in this comprehensive tax reform. Make sure there's no special interests. But not a lot of clarity on what was meant by that in the actual framework. So, you know, those, these guidelines have been issued a couple times. As I said, it's very similar to what was in Trump's plan. Very similar to what came out this summer. But up until now, we've really been waiting for Congress to get through their dialogue and debate and work around ACA, health care provisions, Obamacare. That has kind of been put down. And now the big initiative is around comprehensive tax reform. So if we move on to the next slide, I just want to talk briefly about some of the balancing act that we have around tax reform before I get into a comparison of a couple different provisions. And then I'll get into really where we're at right now and where the impetus lies with this tax reform. So if we move on to slide six. Thank you, Craig. What you see there is that what we're trying to illustrate is that comprehensive tax reform is really going to be a balancing act. There are competing resources and competing influences around what comprehensive tax reform will look like and who will be impacted. These general statements are a nice starting point, but as with anything else, the devil is in the details. And how we actually get there will be a balancing act between tax reduction, revenue reduction and debt of the country. So all of these things are kind of flowing back and forth. Should we have lower rates or should we broaden the base? Can we have permanent benefits or expenditures or should they be temporary? Retroactive versus prospective is a very interesting dialogue that's happening right now. And all of these things are kind of balancing acts and they're swaying back and forth and they will continue to be evaluated over the coming months. Up until now, the impetus around comprehensive tax reform has been low. There's been a lot of dialogue around it, but it's been unclear that we would really be able to effectuate change. And I'll get to this in a minute. There have been positive steps in the last weeks that have really indicated that we're maybe turning the corner on that logjam that we had. So before I get to that, though, I do want to go on to slide seven where we do have a comparison of GOP tax reform proposals. This is a little bit of a small slide, but the importance here is that there are kind of three prevailing proposals that have been utilized over the past three or four years that provide a roadmap for what ultimately comprehensive tax reform could look like. The first one is on the far right. That's the 2004 Chairman Camp Bill. So former House Ways and Means Committee Chairman Dave Camp issued a bill in 2014. It was pretty fully articulated, very well-defined set of changes. And the most well-defined set of changes is of the three here. Now, it is a little dated, and certainly we wouldn't expect it to be fully adopted, but it may serve as the best guideline for what some of the pay-fors could be and certainly is instructive to us as to what maybe some of those details would be. Then in 2016, we received a House GOP blueprint, which had some additional clarification but was lacking in details. And then ultimately, as we've already discussed, in April 2017, July, also summer of this year, we've received some more guidance from the President Trump Administration on what their view of comprehensive tax reform should look like. So those three, I guess, proposals will help inform us as to what we think tax reform will look like. But all that being said, realistically, our next realistic look at what comprehensive tax reform could be could be out within the next month or so. Patrick? Yep. Hey, it's Brent. Can I just add one thing on this slide? Yep. Well, what's really interesting with this is when we look back, obviously, at the campsite, is, you know, Kemp had, I think, an initial driver to really see what he can do to drop the tax rate, corporate tax rate, down to 25. And that was his end goal. And with that, he put everything on the table, which was really fascinating to watch when he said that, because he wasn't looking at any special interests or any other pay-fors in the sense of preferences. He went out there and said, what if everything was on the table? So it was interesting. Most everything, you know, by the time he got down, everything was really on the table, including like-kind exchanges, LIFO. The lowest he could get was 25%. So the challenge, what's going on right now, I think, both the Senate and the House, is saying, if we saw what Kemp did in 2014, we really have to dig deep. And that's why we saw the border adjustment tax sort of fail, because it was so unpopular. But even this week, we heard even trying to get 401ks limited to help broaden the revenue coming in. So what's interesting with that is just understanding what they're going through is very, very difficult to get to 20%. We should see some, or we heard that we may hear some little rumors coming out as early as tomorrow. But we think early next week, I'm sorry, in about a week and a half, we'll start seeing the outlines of the bill and really seeing what's going to happen with the bill. Today and tomorrow, they actually have a very important vote that's dealing with the House passing the budget. And so that's that first step that's going to be critical for them to say, if they pass the budget, then they can move to tax reform. If that doesn't pass today and tomorrow, that's another roadblock. So all this stuff is so interesting, because it is so fluid. And day to day, it's changing. But it's just interesting looking at the same issues they were dealing in 2014, they're still dealing with today. Yep. And that's a great segue. I got a little distracted, because I don't know about you all, but I need to turn off my pop-ups. But as I was talking, I had a pop-up from the Wall Street Journal telling me that the House just narrowly passed a $4 trillion budget, clearing the hurdle for tax overall. So this is coming live, right? Things are changing all the time, as Brent said. And that actually takes us to the next slide, which is slide eight. So thank you, Brent, for chiming in and continue to do that. But last week, the Senate passed a budget resolution that essentially paved the way for tax reform. You know, right before it went to committee, a management amendment was added to that by the chairman. And essentially, that kind of freed up or made it more palatable to the House. It allowed for a $1.5 trillion cushion that would allow for maybe not a complete offset of tax, and really allow the reform to happen in a reconciliation versus an all-out reform, which means that they only need to get a majority, a simple majority, through the Senate to pass comprehensive tax reform. So a really big result last week. And as Brent was saying, as we were expecting this week, that to see what would happen through the House. And as I just said, the House just recently passed that budget as well, narrowly. So that really opens the door for the next step, which is to have the House Ways and Means Committee mark up a chairman's draft of what the bill could look like. What we've heard is, as Brent said, we could see that as early as next week. I think what everyone has said is it will not be on Halloween. There is definite precedent to not issue any bills on Halloween. I think it would be too easy to make the trick-or-treat joke, so they're all avoiding that. But realistically, next week's probably difficult. Maybe it's the following week. But sometime in the next several weeks, we should see a somewhat fully articulated bill out of the Ways and Means Committee. At that point, it would go to the House to debate. But at the same time, the Senate Finance Committee would have the ability to offer some suggestions and recommendations. So we're not certain if they'll wait to see what comes out of the House before they do that. But that could – those are kind of the next steps. The House Ways and Means will issue a chairman's mark, and then the House will kind of debate the bill, and then ultimately the Senate Finance Committee will kind of make revisions, and then it will be debated in the Senate. So I think I covered very quickly slide 8, the benefits that we – the bill requires only a simple majority vote and also that we have expedited consideration, so time limits for floor amendments and debate. The limitations are the deficit increase is not permitted outside the budget period, so 10 years. So that 10-year period is going to be a part of the valuation, and all provisions must have an effect on federal spending or revenue, which is within the guidelines of the provisions. So with that being said, with the passage of this budget, this really opens the door for this comprehensive tax reform to take place. If we move on to the next slide, we again identify some of the competing priorities that may affect the timing. They have stated as a goal that they want to have this comprehensive tax reform done before the end of the year. I would say there's a lot of individuals that are still on the fence as to whether that can happen. But somewhat regardless of whether or not it's enacted before the end of the year, they do have the ability to make effective dates retroactive. So that's something that we have seen in the past. There's a lot of debate about what people think is actually going to happen or what isn't going to happen. I think maybe – I wouldn't want to guess, but I think a lot of people think that it won't happen by December 31, but most still feel that it will be effective 1-1-18. One of the things that we've said coming out of the passage of the budget is, until now, if you weren't paying attention to this conversation around tax reform, I think that you would be in the majority because it looked like it was going to be really hard to get done. But with these two steps, we've really rounded a significant corner, and we can see now or we're going to see now what a bill would look like. And it's really imperative upon taxpayers to think about what that bill looks like and whether or not it has negative or positive impacts to them. And Congress wants that feedback. They're giving us the time, hopefully, to take a look at the bill and make sure that there are no unfair winners and losers in the bill. So if you've been waiting to get involved in this conversation, now is the time because we are going to have something very soon that could have a significant impact on every one of the taxpayers on this phone call. Brent, anything to add there before I talk about slide nine? No, the idea of getting involved is very interesting. Just to give you a little insight, there was some discussions with the senator out of Texas just this week, and his staff was very adamant about 1031s were on the chopping block, of saying that they were being discussed more and more. It actually elevated to we had three other conversations with the chief of staff finding out why their staffer was talking about that. So now we have a really strong push of contacting all of our clients that are in the Texas area to say this is important. Because as we talked specifically, let's just say in 1031s, we really pressed hard of even if 100% expensing is continued, don't repeal part of the tax code because it's very, very difficult to put it back in. So if we have temporary 100% expensing for five years, and after year five we don't have an opportunity for like-kind exchanges, that really hurts the economy as well as we talk about a contraction. So getting involved is, you know, you cannot do it soon enough. If people are on there thinking how do I get involved, how do I reach out to my congressman, a lot of opportunities just to let them know certain parts of the tax code are important to your business. And you're right, getting involved now is critical. Great. So slide nine talks about some of the competing priorities that may affect the timing. I think those are all things that we all think about and we all realize could make the timing very challenging for a comprehensive tax reform. That being said, you know, this Congress has not had a lot of wins and has not had a lot of success to date. So there is a real imperative from this Congress to get something done on tax reform. And again, as I said, it may not be possible before the end of the year, but that doesn't mean that it couldn't be retroactive back to the beginning of the year. I'm not going to go through all these items. I think that you all are aware of them. So maybe we'll just move on to the next slide to highlight maybe why it's important to think about these matters. I think the main point we're trying to make here is, you know, as taxpayers, if it were me and I were thinking about this really high level, then I would say, well, what is there for me to be concerned about? We're going to a lower rate. How could that be anything but bad? I understand there's some givebacks, but, you know, we're talking about a significant reduction here in the potential rate. There's a couple things there. You know, this rate seems to be a starting point. That could move. Secondly, though, there are some pay-fors in here, which include this interest deductibility. So what we're trying to illustrate with this slide is that you may have a taxpayer with a high level of interest cost that may, in the future state, not find those costs to be deductible. And even with a lower rate, you could have a higher tax liability. And I'm not going to go through – I'm getting a little bit behind on time, and I want to make sure I give Tom his appropriate time, but I'm not going to go through the example explicitly. But what it shows is that in this scenario where a taxpayer has this interest expense that's non-deductible in the future, even at the lower rate of 25%, they are paying more tax, federal income tax. So it's really important that we're paying attention to all the provisions that come out next week or the following week and making sure that we're kind of scoring those to make sure we know where we need to, as a group, like the AED, as a group, think about what messages need to go to our congressmen and our senators. So with that, I think I'm going to move on to the date change slide, which I think is slide 12, Craig. I did see a question about the timing. We'll try to keep right to noon. And we will cover specifics related to – you know, interest deductibility is an interesting one. We will cover, as much as we can, some specific planning ideas related to equipment dealers. So thank you for the question. So here are some things that occurred within the last year to essentially what we would say paved the way for comprehensive tax reform. And the first one that we have is date changes for tax years beginning after December 15, 2015. So hopefully you all saw these changes come out. Essentially the due dates of returns for tax years beginning after December 15, 2015 had been changed. We have a good set of guidance here. I think that you all can probably peruse this deck at a later date. For the most part, what happened is for C-Corps, those dates moved back a month. So a nice benefit to give you a little bit of additional timing to get your returns filed. Maybe, Craig, we move on to the next slide where we talk a little bit more about the extended extensions. Again, I just want to make sure I'm giving Tom a good amount of time. But last year we also saw an extension for the R&D tax credit and several other provisions. The importance of these extensions is that in this cycle where oftentimes Congress is debating whether or not they need to extend credits or make legislative changes to sunsetting provisions, these extensions were made permanent. And what that did is it took that debate off of Congress's plate for this session. So instead of having to worry about extending the R&D credit or think about bonus again, those things were kind of eliminated from the agenda. So really important, again, to pave the way for comprehensive tax reform. And I think the next slide, can you go ahead to the next slide? Yeah, just more of the extenders, so new market credits, work opportunity credits, and then again we've got bonus, which was extended, so 50 percent in 2016 and 17, and a phase out in 18 and 19 at a lower rate. So I think the most important thing there, though, from our perspective, this is not new news, but it's important to realize that this was done to really enable comprehensive tax reform in this upcoming session. So with that, I'm going to turn the conversation over to Tom, who's going to talk about, take the conversation from the general high-level discussion of comprehensive tax reform to a more specific discussion of what dealers can do to help plan for, you know, the impending rate change. Okay, thanks, Pat. Craig, can you go to slide 16? And so from a dealer perspective, and quite frankly, from any taxpayer's perspective, you know, if you buy into the fact that there will be some reduction in, whether it's corporate pass-through or individual tax rates, that there will be some reduction in tax rates, which I believe is going to happen, and I believe it's going to happen sometime beginning in 2018, that from a tax planning perspective, your motivation, your goal should be to accelerate any deductions that you can into 2017, defer the recognition of income into 2018 and beyond, and ultimately achieve a permanent tax benefit because you're able to take a deduction at a higher rate or move income into the future at a lower rate and achieve a permanent tax benefit, in addition to achieving an accelerated cash flow by virtue of paying less tax. And even though we're late into 2017 here, there are still opportunities that exist to do this, to accelerate deductions into 2017 and to defer income into 2018 and beyond. And that's really what we're going to talk about here. Some of the items that we're going to talk about kind of apply to any taxpayer, any business, if you will, and then there are a number in the remaining slides here that are specific to equipment dealers and distributors. So with that, we're going to kind of get into some of the specific ideas that we have. And Craig, let's go to the next slide, slide 17. So the first idea deals with bad debts. So what many times you see a taxpayer do with respect to bad debts is from a book standpoint, you know, they, a taxpayer will increase their bad debt reserves, you know, kind of based on past history or what they think the future will look like. And many times for tax purposes, you will simply, you know, you can only deduct a bad debt when it is worthless, okay? It's factually worthless. Many times what we see taxpayers do is, you know, if the bad debt reserve, say, increases by $100,000, they will make an add back of $100,000, okay? And to the extent that companies are adding to their reserves based on an estimate, you still have to do that. You cannot take that deduction for tax purposes. But what many times taxpayers miss or lose sight of is to the extent that embedded in that allowance for bad debt amount, to the extent there are amounts that are specific, specifically uncollectible, meaning they're worthless, and worthless is a facts and circumstances determination. But, you know, if one of your customers, let's say, is in bankruptcy, or you've exhausted all efforts to collect on that account to no avail, then that item can be specifically identified and deducted for tax purposes, even though it may not have been completely written off for book purposes. So that's the opportunity with bad debts. Next slide. Slide 18, dealing with self-insured medical. So what we see here is, you know, companies will have, if they're self-insured, they'll have a medical reserve accrual on their books, on their balance sheet. And for tax purposes, they simply have added that back, so the method that they've been utilizing is essentially almost like being on a cash method, okay? So the opportunity here is, you know, to the extent that the medical service, so if you have a year-end accrual, to the extent that the medical service itself has been rendered by year-end, but just because of the, you know, the nature of the timing of the service in terms of when payment ultimately occurs, meaning payment would not occur until after year-end, to the extent that the medical services have been rendered before year-end, but the processing of the claim and so forth doesn't occur until year-end, that claim can be deducted at year-end, even though it's not paid until after year-end. And the whole idea is that it's more of kind of an administrative act or effort that needs to take place, but it's going to take place after year-end no matter what. So again, as long as the medical service has been rendered before year-end, the tax deduction can be taken at that year-end in which it's accrued. Next slide, accrued bonus, okay? This is something that we see with the IRS. This was one of their hot buttons, I would say, about three, four, five years ago. I'd say taxpayers have kind of caught on to this, and this is really more of a, in some respects, more of an exposure, but the idea here is that if you have an accrued bonus, and to the, you know, the general rule is that in order to deduct that bonus before year-end or as part of year-end accrual, it has to be fixed and determinable and then paid by two and a half months within year-end. So if you're a calendar year taxpayer, as long as that accrued bonus is paid by March 15th of the following year, you can deduct it in the year in which it's accrued. However, the amount also, in addition to payment by March 15th, has to be fixed and determinable. So, you know, one thing, a word of caution here is make sure that your plans are fixed and determinable by year-end. So some examples where they're not fixed and determinable are if the determination of the bonus is discretionary, and the ultimate decision as to what is accrued, whether it's by the executive management team or the board or whatever, if the decision around what the amount of bonus accrual is not made until after March 15th, or sorry, after January 1st, even though it's paid by March 15th, it is not fixed and determinable because there's discretion involved. So the other example, too, that the IRS has focused in on is that if your plan is fixed and determinable at year-end, paid by March 15th, but if the plan calls for, if an employee were to leave the plan, sorry, leave the company before payment takes place, and then there's a reduction in the amount of the bonus that's ultimately paid because of that employee who has departed, that also is not fixed and determinable. So a couple of words of advice around this is in terms of ensuring that your plans are fixed and determinable, number one would be, well, we see some of our clients do, number one is, you know, one thing you can do is kind of have a minimum, a floor, if you will, so making up numbers here, let's say, you know, at a minimum, you know that you're going to accrue a million dollars of bonuses, okay, and ultimately, the amount that ultimately is accrued and paid might be, you know, let's say a million five. What you can do is within your plan saying we know every year at a minimum we're going to accrue and pay out a million dollars, and then any excess amount on top of that would then not be fixed and determinable, so at a minimum, you could deduct the million dollars every year. The other thing that you can do is you can make sure that, or as long as your plan is based on a formula, you know, a formula that, you know, where basically you kind of plug in the year-end numbers, whatever the metrics are or the criteria around bonus that you might have, as long as it's kind of formulaic based and that formula has been approved by the board before year-end, and it's just a matter of kind of plugging in the numbers after year-end once the final financial statement numbers are known, that too would qualify, and then lastly, around my example of an employee who leaves, you know, you could still be fixed and determinable as long as if that employee left and doesn't get paid their bonus, but whatever that person's bonus would be stays within the bonus pool and then just gets redistributed to other employees, then that would meet the criteria as well. So there's a number of kind of things to think about regarding accrued bonuses to ensure the deductibility of those accrued bonuses at year-end. Next is accrued compensation. Real quick on that, slide 20, you know, just be mindful of, you still kind of have to think about the fixed and determinable requirement that I just went through, but as it relates to other compensatory-related items, commissions, you know, salaries, anything of a compensatory nature, you know, just be mindful of anything that's accrued at year-end as long as it meets the fixed and determinable requirement and paid within two and a half months of year-end would be deductible in the year in which it's accrued. Next slide, payroll tax liabilities. So you see this a fair amount in private companies. Now, it may or may not be material to your business, but, you know, if you have a sizable payroll amount, and this would be true for any compensatory-related item, compensation, commissions, bonus, so on, severance, the idea here is that many times taxpayers, they will not accrue the payroll tax associated with the year-end compensation. So in other words, if they have a million dollars of bonus that they're going to pay out, they'll accrue that, but then whatever the related payroll tax around that might be, they do not accrue, okay? And the idea here would be is because it's fixed and determinable, you know, the opportunity here is to accrue it at year-end, to accrue and deduct it at year-end. Now the one thing is that if you're, you know, you can do this, but basically you're going to need to have book tax conformity. So if you decide to, you know, deduct the payroll taxes associated with these year-end compensatory items, you probably also need to do so for book purposes as well. Slide 22, software development costs. So if you're involved in any kind of ERP implementation or any kind of redesign of your existing systems, to the extent that you're capitalizing for book purposes any software costs, there's a distinction here. If you're purchasing software off the shelf, so to speak, or hardware, you know, those costs would be capitalized and depreciated, amortized over a three-year period. But to the extent that you're, you know, you're doing, you're hiring outside consultants to help with coding, designing the software to make it compatible to your needs, and those costs are being capitalized for book purposes, many times there's the opportunity to accelerate and deduct those costs, these internally, either internally or externally developed software development costs. You can deduct those costs as incurred. Next one, prepayment liabilities. So this would be any kind of prepaid items that might be on your balance sheet on your assets. The classic example that you see would be in the prepaid insurance. So the idea goes something like this. If you're a calendar year-end, but for one reason or another, let's say, you know, your insurance renewal period is July 1 to June 30th year-end, okay? And let's say that you prepay all of your insurance for the entire June 30th year-end, you pay that all by December 31st. And on your books, you've got six months now of prepaid insurance. So as long as the prepaid, the contract period is one year or less, you can accelerate that deduction into the year in which the payment occurred. So in my example, the six months of prepaid insurance, this would be from January 1 to June 30th of the following year, you could deduct that in the previous year because that's the year in which it was paid, okay? And you can see this, you see this with insurance, warranty, software, maintenance, contracts, licenses, fees, permitting, things like that. Now the key is the contract has to be one year or less. If it's more than one year, you cannot deduct it. The idea being is that, you know, as long as the useful life, if you will, of this asset is one year or less, you can accelerate deduction. If the useful life is one year or more, meaning the contract is one year or more, you cannot deduct it. Next one, cash trade discounts, something that we see within the equipment dealer distributor industry, slide 24. So sometimes you'll see in terms of when inventory is purchased, it's recorded at the gross payment amount without considering the cash discount that the manufacturer may be supplying or providing to you, the purchaser or the dealer, okay? So the idea here would be is that instead of recording the inventory, the purchase at gross, you would record it at the net amount, net of the discount, the discount you know you're going to get, and then what that enables you to do is it enables you, so when you do get the discount, you know, and this would again apply where you purchase the inventory in year one at the end of the year, but then the discount doesn't occur until after year end, but the idea here is you can record that discount net, and then the benefit or the income recognition related to the discount doesn't occur until the inventory is ultimately sold, which presumably would be after year end. Slide 25, real quick on this one, a lot of times we'll see with respect to rebates, incentives, and sales returns, those items for tax purposes are deducted only when paid. There's something out there called the recurring item exception for tax purposes that says that to the extent that that accrued rebate incentive is fixed and determinable at year end and is paid within eight and a half months of year end or the, sorry, it's the earlier of the filing of your tax return or within eight and a half months year end, you can accelerate that deduction for tax purposes, meaning you can deduct it in the year in which it is accrued. Slide 26, accrued service liabilities, this would be, example would be your year end audit fees, for example, or any similar related service liabilities, something that is kind of a reoccurring type of expense that you incur. Sometimes you'll see a taxpayer, they will only deduct that, even though it's accrued on the balance sheet for book purposes, they will not deduct it until actually, until the following year in which the service is ultimately rendered and paid. So I'll use the example again of the audit fee, so for your 2017 audit fee, you may accrue that at year end and not deduct it for tax purposes. The idea would be as long as the service, the audit will take place within eight and a half months of year end and it's paid within eight and a half months year end, you can deduct it in the year in which it is accrued. Okay, unbilled receivables, slide 27, this is a situation where for financial accounting purposes, the income is recognized as the services are performed. For services, when performance of the service is complete, so the idea being is that for tax purposes, even though there may be a receivable booked for book purposes, namely debit receivable credit income, the idea being is that for tax purposes, you do not necessarily need to recognize that income for tax purposes until the service in which you're providing has been fully completed and done. Okay, so there could be some overlap between the receivable being booked before year end, but then the service is midstream and it doesn't get completed until after year end. The income would not need to be recognized until after year end the following year when the service is ultimately completed. Deferred service costs, this would be an area we also see in the equipment dealer industry. The good example here is let's say you're working on a large repair project for a piece of equipment, okay, and the costs of the repair project, the internal costs, because the project is not complete, the repair project's not complete at year end, for book purposes, the labor and overhead and related costs would be capitalized on the balance sheet as kind of a prepaid asset, if you will, but then the repair project is not ultimately done until after year end, but the fact of the matter is as long as that project is completed within a year in which it started, which 99 times out of 100 in the equipment industry that would take place within a year, you can deduct those service costs as incurred in the year in which the prepaid or the deferred asset is booked, again, even though the project itself isn't, even though it isn't ultimately completed until after year end. Slide 29, subnormal goods, this is, this kind of relates to your inventory. This would be more on a, if your inventory is on a FIFO basis, but the idea here is to the extent you have an obsolete inventory reserve, you know, generally speaking what we see is taxpayers will not deduct the inventory until it's ultimately scrapped. So the idea here is that, you know, you have to have good support and good documentation around this, but again, as long as you can substantiate and document the fact that the inventory is, you know, is worth a fraction, if you will, of what it was paid, therefore it's obsolete, as long as you can document that and what really works well is, you know, you can say, well, look, I've held this out for sale at these various prices and I can't sell the inventory at this price, so, you know, that means that it can't be worth any more than this. There's the opportunity to accelerate the deduction or the write-off, if you will, of that inventory to scrap value. Again, the key, though, is you've got to have very good records to support the fact that the inventory was worth the lesser amount that you're claiming the write-off for. And slide 30 is a similar type of analysis as it relates to lower cost or market. It's basically the same concept, and again, the key here is making sure that you've got the right documentation to support a lower cost or market deduction versus, you know, again, not taking that deduction until the inventory is ultimately sold or scrapped. Slide 31, I think we're making good time here. I've got, I just, I'll touch on one, I'll just touch on LIFO and then I'm going to turn it over to Patrick to just kind of close with talking about LKE, lifetime exchange. But LIFO, you know, think about the fact of being on LIFO if you're not, you know, and could be for your, not just necessarily for your rental, I'm sorry, for your inventory held for sale, but also for your repairs or your repair parts as well. You know, in an area, in a time of rising prices, LIFO is absolutely a very beneficial idea for taxpayers, especially taxpayers dealing with high ticket items like in the equipment dealer and distributor industry. So think about LIFO, I mean, I'm the first to say that it's, you know, it takes some effort to implement LIFO as well as to maintain it, but if you've got quality record keeping and good people to support that, it's definitely worth thinking about. So that's kind of my laundry list of ideas, maybe to close it out, Pat, you want to talk about LKE and then maybe do a close and I think we're done. Yeah, great, thanks, Tom, and great job getting us back on time. So Like-Kind Exchange has been around since just about the time that the income tax provisions were enacted, I think it was around 1920, but essentially what Like-Kind Exchange allows for is for a company that has a fleet of homogeneous assets like a rental portfolio, when they depreciate those assets for tax, oftentimes the tax depreciation is ahead of the book depreciation, and as a result, when you go to sell the asset, whereas book depreciation tries to align with the future sale cost, so maybe that there's very little book gain or loss on the sale, what oftentimes happens for tax is that we have a large tax gain, and ultimately taxpayers would have to pay tax on that. Well, the whole point of accelerated depreciation is to encourage investment in new property, and what happens with that tax on gain is kind of a contra-incentive to remedy that issue of we're going to incentivize you to buy new property, but at the same time penalize you for selling old property, Like-Kind Exchange was enacted, and that's essentially what it does. It allows a taxpayer to still invest in new property without the penalty of that tax on gain. There are some hurdles that taxpayers have to go through to accomplish that, and many equipment dealers are already doing this with rental portfolios, so what we wanted to highlight is just like all of the provisions that Tom went through, Like-Kind Exchange is another great lever that you can pull to accelerate or minimize current taxable income, which results in a future tax liability, no doubt, but in this realm where you expect your future tax rate to go down, not only do you get the time value of money of a timing difference in the current period, you also get a P&L benefit associated with that change in rate, so you get the deduction now in the high tax rate period of 35 percent, and you pay it back later in a lower tax period, which is what we still expect, so I think I'm going to stop there. We did want to try to finish at 12, so I'm just going to reiterate the point, and then we'll leave the line open for any questions, but I'm going to reiterate the point here, which is that with the passing of these budgets, both the House and Senate budget, we've really cleared a significant obstacle to comprehensive tax reform. With that in mind, we expect to see a more well-articulated plan for comprehensive tax reform in the next several weeks. That comprehensive plan will almost certainly involve a lower tax rate in the future. Everything that we've seen so far is pointing towards that. We fully expect that. The time to think, so that's a great thing for taxpayers, but it's also an opportunity for taxpayers to think about how they can take advantage of the higher tax bracket now, accelerate deductions, get those deductions in the high tax rate period, and pay for them in the lower tax period, which is in the future. I do want to see if we have any questions, but otherwise, oh, great question, Diana, about how we can see the webinar again after we are done. I think there's a link that's sent out with the replay, Craig, is that correct? Yeah, I know that the AED records these webcasts and makes them available, so rest assured, we've got Liz on the phone listening with the AED, so rest assured that will happen. Yes, as soon as we're done, we'll make an archived recording available, so it should be available on your dashboard on the LMS. Great, thanks for the question, Diana. I appreciate Tom going through those lists. Essentially, Tom highlighted 20 or more ideas that could help you with that acceleration of deductions, which is going to drive both that current tax savings, net present value of money, as well as the P&L benefit if we do see conversion tax reforms. Obviously, we're all going to be paying close attention to what happens over the next couple of weeks, and we're going to be paying attention to what is going to be happening over the next couple of weeks and trying to get as much information out to this group as we can. One more question came in, and for those of you who have a hard close at 12, we appreciate your time. Thank you for getting on the call. For those who have a minute, I'm going to read this last question. How is business tax interest expense treated for sub-S corp in the preliminary tax reform? Tom, do you have a thought on that? Well, I think my understanding is that right now the potential interest disallowance is at the C corp level, so I think it's the same as always as it relates to S corps. I haven't seen anything that would suggest otherwise. Good question, William. I think that's right. I mean, I think part of the point is we just haven't seen a lot of details from the framework and the principles and the statements that we've received so far. It doesn't look like it would impact S corps, but more to come as we see that articulated over the next couple of weeks. Okay, well, thanks, everyone. Have a good day, and it was nice talking to you. Oh, Pat, quick note from Craig here. As people download the webcast and listen to the recording in the future, we had contact info for all of the presenters on that second slide, so feel free to reach out to them at any point in the future. Thank you.

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