IT’S LIKE, ‘WAIT, SLOW DOWN — WE HAVE TO FIGURE THIS OUT.’

about the nuances.”

After the last major tax overhaul took effect in 1986, it became clear that many small businesses would benefit by reorganizing as partnerships, says Joseph DeGennaro, tax director for Doeren Mayhew in Detroit. Doing so allowed their business profits to be passed on as personal income, which was taxed at individual tax rates. At that time, the top individual rates were lower than the corporate rate.

Now, the situation is reversed: The new legislation sharply cuts the corporate tax rate from 35 per cent to 21 per cent — much lower than most individual rates. DeGennaro and other accountants say the question being posed most often by small-business owners is whether those firms should now restructure as corporations. This time, the answer is not so simple.

If corporations pay out their profits to owners through dividends, those payments are taxed at 23.8 per cent. That rate, once combined with the corporate tax rate, is much higher than individual rates.

And in some cases, if a business restructures, it can’t switch back for five years. What if a new Congress raises the corporate tax rate, in say, three years? At that point, DeGennaro pointed out, a business owner would be stuck paying the higher corporate rate. “I’m telling clients that nothing is permanent,” DuBoff said. “If you restructure for the new law, you better have an exit strategy.”

Many critics of the GOP bill argue that it will encourage high-income earners to turn themselves into businesses and reclassify their salaries as business income, which will be taxed at a lower rate. But the bill seeks to bar this through complex rules and by blocking many professionals, such as lawyers, accountants and doctors, from taking that step.

Mark Nash, a tax partner at PwC, based in Miami, said that so far, the provisions are broad and general, making it difficult to advise clients on whether to essentially incorporate themselves.

“We’re left to scratch our heads about what it means in the real world for somebody’s actual circumstances,” he said. “It’s quite a complicated ... to calculate.”

Some of these questions must be answered before year’s end — an additional source of frustration for tax experts. “It’s too much, too quick and too little time,” Smith said.

DeGennaro noted that come Jan. 1, the changes will eliminate the ability of businesses to deduct their entertainment expenses.

“People should be looking at their entertainment policies right now,” he said.

Others point out the sharp cut in the corporate tax rate could benefit — or harm — a company’s balance sheet. Companies that have postponed tax payments might enjoy a windfall because they will owe less in 2018. Other companies could absorb a hit because the value of their tax refunds will fall.

Such questions are consuming numerous hours for people like Howard Wagner, a Louisville, Ky.-based accountant at Crowe Horwath.

“It’s going to be a miracle if I make it through the next two weeks,” Wagner said.