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Several previously released inflation-adjusted figures corrected

April 16, 2018

In a Revenue Procedure, IRS has revised Sections 3.08 and Section 3.10 of Rev Proc 2018-18, 2018-10 IRB 392 (which reflects the impact of changes made by the Tax Cuts and Jobs Act (TCJA, P.L. 115-97, 12/22/2017)) to indicate an increase in the state housing credit ceiling enacted as part of Division T, of the Consolidated Appropriations Act of 2018, and to correct an error concerning the alternative minimum tax phaseout threshold amount for estates and trusts (the phaseout threshold amount should have been $81,900, not $500,000).

Background. Under the the Tax Cuts and Jobs Act (TCJA, P.L. 115-97, 112/22/2017), for tax years beginning after Dec. 31, 2017, dollar amounts that were previously indexed using Consumer Price Index for All Urban Consumers (CPI-U) are instead indexed using Chained Consumer Price Index for All Urban Consumers (C-CPI-U, i.e., so-called “chained CPI”). In Rev Proc 2018-18, IRS recalculated its previously released 2018 figures to take account of the new inflation measure and to reflect other changes made by TCJA. For greater detail on these and other inflation adjusted items affected by TCJA, see 2017 Tax Reform: Revised inflation-adjusted and other 2018 amounts for individuals (3/8/2018), 2017 Tax Reform: Revised inflation-adjusted 2018 figures for health charitable, and other specialty items (3/8/2018), and 2017 Tax Reform: Revised inflation-adjusted 2018 figures for transfer tax and foreign items (3/8/2018).

On March 23, President Trump signed into law the Consolidated Appropriations Act, 2018 (Appropriations Act, P.L. 115-141), a $1.3 trillion spending bill that funds the federal government through Sept. 30, which had to be approved to avoid a federal government shutdown. Along with a fix to correct a drafting oversight in the TCJA (the so-called “grain glitch”) and numerous technical corrections, the Appropriations Act included a provision enhancing the low-income housing credit to increases its availability.

New amounts. Rev Proc 2018-22 provides that Sections 3.08 and 3.10 of Rev Proc 2018-18 are modified and superseded for tax years beginning in 2018.

(1) Sections 3.08 of Rev Proc. 2018-18 is modified to provide:

Low-income housing credit. For calendar year 2018, the amount used under Code Sec. 42(h)(3)(C)(ii) to calculate the State housing credit ceiling for the low-income housing credit is the greater of (1) $2.70 multiplied by the State population, or (2) $3,105,000.

(2) Section 3.10 of Rev Proc 2018-18 is modified to provide:

Exemption Amounts for alternative minimum tax. For tax years beginning in 2018, the exemption amounts under Code Sec. 55(d)(1) are:

For Joint Returns or Surviving Spouses, $109,400.

For Unmarried Individuals (other than Surviving Spouses), $70,300.

For Married Individuals Filing Separate Returns, $54,700.

For Estates and Trusts, $24,600.

Excess taxable income threshold. For tax years beginning in 2018, under Code Sec. 55(b)(1), the excess taxable income above which the 28% tax rate applies is: $95,550 for married individuals filing separate returns; $191,100 for joint returns, unmarried individuals (other than surviving spouses), and estates and trusts.

Phaseout amount. For tax years beginning in 2018, the amounts used under Code Sec. 55(d)(3) to determine the phaseout of the exemption amounts are:

For Joint Returns or Surviving Spouses, $1 million.

For Unmarried Individuals (other than Surviving Spouses), $500,000.

For Married Individuals Filing Separate Returns, $500,000.

For Estates and Trusts,$81,900.

Rev Proc 2018-22, 2018-18 IRB

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