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Turtle Creek Management, LLC

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Turtle Creek Management and Turtle Creek Trust Company Focuses Client Attention on the Recent Federal Tax Cut and Jobs Act

Turtle Creek Management and Turtle Creek Trust Company Focuses Client Attention on the Recent Federal Tax Cut and Jobs Act
Dallas, TX, March 27, 2019 --( On December 20, 2017, Congress passed a statute originally named the Tax Cuts and Jobs Act (TCJA) which enacts a broad range of tax changes. The Act was signed by the President on December 22. One of the key provisions of the Act is for tax years beginning after December 31, 2017, corporate income will be taxed at a flat 21% rate. Craig Knocke, CFA Principal of Turtle Creek Management stated, “This is material to us as Investment Managers as the lower rate will flow through the financial statements of companies resulting in higher intrinsic values longer term. Our fundamental based approach to investing capital for client accounts is driven by extensive analysis of company cash flow and this change makes many tax paying companies incrementally more valuable over time.”

The TCJA did not repeal the federal estate or generation-skipping transfer (GST) taxes. It did however double the maximum gift/ estate tax exemption, as well as the GST exemption. Thus, as of January 1, 2018, the maximum estate/gift and maximum GST exemption amounts – which had been scheduled to rise to $5,600,000 under prior law – will be $11,200,000. That means a married couple pooling their exemptions will be able to shelter up to $22,400,000 from gift, estate, and GST taxes. Mr. Knocke added, “This also means an individual who had previously used all his or her estate/ gift and GST exemptions will have a substantial addition of $5,600,000 of exemptions with which to plan.”

Further, the gift tax annual exclusion was unchanged and will increase from $14,000 to $15,000 as had been previously scheduled. Like other noncorporate tax features of the TCJA, the exemption increases are scheduled to phase out after 2025 (assuming no further law changes).

Knocke finished by saying, “As it is unlikely that Congress would seek to impose retroactive taxes on gifts made under an earlier exemption, it makes sense to take action while the exemptions remain available. The TCJA creates unprecedented opportunities for new gifting vehicles or the ability to augment existing gifting strategies. Turtle Creek is actively involved in working with clients and their tax advisors to take advantage of the numerous changes that have taken place.”

For More Information:
Contact Craig Knocke at Turtle Creek Management, LLC
Turtle Creek Trust Company
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Turtle Creek Management, LLC
Craig Knocke

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