SS&C Technologies : Tax trends and the importance of monitoring your portfolio from a tax perspective

Today's environment and market volatility have prompted fund managers and investors to evaluate the tax implications of their portfolios. The dislocation of markets has created a dynamic that is more important than ever to monitor your portfolio from a tax perspective. In SS&C's recent webinar 2021 Tax Outlook and Discussion - What you need to know our tax experts discuss what these outcomes mean for fund managers and their investors, along with rising tax trends among active portfolio managers.

The main events influencing tax planning this year are lessons learned from the 2008 financial crisis, the 2017 Tax Cut and Jobs Act, the COVID-19 pandemic, and various regulatory changes. The webinar explores a variety of topics that are of particular importance this tax season, as well as considerations that might arise in the coming year, such as modifications to the 2017 tax bill. Another area of special relevance this year is how the CARES Act impacts taxes. For instance, how should Paycheck Protection Program loans and Employee Retention credits be treated? What are the state and local impacts of a remote workforce?

Also influencing tax planning this year is the recently released 'The Made in America Tax Plan[1] ' by President Biden.

The current corporate income tax regime contains incentives for corporations to shift their production and profits overseas. Declining corporate tax revenues hinder the ability of the United States to fund investments in infrastructure, research, technology, and green energy. The Made in America tax plan would fundamentally reorient corporate taxation to reverse this legacy.

The proposed tax plan implements a series of corporate tax reforms to address profit shifting and offshoring incentives and to level the playing field between domestic and foreign corporations. These include:

1. Raising the corporate income tax rate to 28%;
2. Strengthening the global minimum tax for U.S. multinational corporations;
3. Reducing incentives for foreign jurisdictions to maintain ultra-low corporate tax rates by encouraging global adoption of robust minimum taxes;
4. Enacting a 15% minimum tax on book income of large companies that report high profits, but have little taxable income;
5. Replacing flawed incentives that reward excess profits from intangible assets with more generous incentives for new research and development;
6. Replacing fossil fuel subsidies with incentives for clean energy production; and
7. Ramping up enforcement to address corporate tax avoidance.

These are the major elements of the Made in America tax plan, but the proposal contains several additional tax incentives that would directly benefit U.S. corporations, pass-through entities, and small businesses. These include, for example, a marked increase in the resources available through the Low-Income Housing Tax Credit and other housing incentives.

These unique issues make it more important than ever to have a timely tax analysis on your portfolio, outlining tax efficiency goals and tools like a wash sale watch list, lost harvesting and aging reports. A tool like SS&C Tax Optimizer can help you perform that analysis.

To learn more about taxation outlooks for open-ended funds and how you can avoid generating losses and wash sales, view our on-demand webinar.

[1] US Department of Treasury

Alternative Investments, Regulation

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