search for solutions by category, industries, insights, and people.
search for solutions by category, industries, insights, and people.
At the beginning of February, President Trump outlined his tax priorities in a meeting with Republican lawmakers, revealing a few new proposals not previously mentioned on the campaign trail. One notable item on his agenda is the push to end the so-called “carried interest loophole.”
Around the same time, Senator Baldwin (D-WI) and her colleagues introduced the Carried Interest Fairness Act in the Senate, while Representatives Perez (WA-03) and Beyer (VA-08) put forth a similar version in the House. Their aim is clear: “to eliminate a tax loophole that benefits wealthy money managers on Wall Street.” As they argue, “[t]he current carried interest loophole allows investment managers to often pay almost half the tax rate compared to most [of their respective state’s] workers.”
Under the current tax code (IRC § 1061), general partners of private equity, venture capital, and real estate funds can structure their compensation to be taxed at a much lower long-term capital gains rate (e.g., a top federal rate of 20 percent) compared to the ordinary income tax rate that salary workers face (e.g., up to 37 percent). The “carried interest” subject to this preferential tax treatment allows fund managers to receive a share of the fund’s profits at a higher rate than their actual capital investment warrants.
President Trump’s support for eliminating the carried interest loophole, alongside the two bills introduced in the House and the Senate, marks a significant and unexpected bipartisan shift in tax policy. This stance signals a departure from the approach in the Tax Cuts and Jobs Act (TCJA) of 2017, which addressed carried interest by extending the holding period required to qualify for long-term capital gains treatment—from one year to three years. Now, it seems the tax benefits for carried interest may face a full overhaul in the upcoming 2025 tax legislation. With Trump’s backing and the growing need for revenue raisers to offset the extension of expiring provisions of the TCJA, even congressional Republicans may be inclined to reconsider their long-standing position on carried interest.
It’s important to note that we are still in the early stages of any potential carried interest reform, and its uncertain what form the legislation will take—or if it will pass at all. We will continue to monitor the developments closely and provide updates as new details emerge.
The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.
.jpg)
Cybercrime has become a trillion-dollar industry, rivaling drug trafficking and international crime syndicates. No one is immune. Scammers exploit human vulnerabilities—fear, trust, and urgency—on an industrial scale, using AI-powered tools to deceive with alarming precision. With just 15 seconds of recorded audio, criminals can create eerily accurate voice clones, making deepfake-driven fraud one of the most underestimated cybersecurity threats of 2025.
While businesses recognize phishing and traditional scams, many fail to grasp how realistic and scalable deepfake attacks have become. AI-generated voice and video are now being weaponized to impersonate executives, manipulate employees, and trick customers into wiring money or sharing sensitive information. A well-executed deepfake call or video can bypass standard verification methods, rendering traditional security measures ineffective.
Yet, most companies remain focused on outdated defenses like email phishing filters and password protection. Combatting AI-powered fraud requires a shift toward investing in deepfake detection, biometric authentication, and real-time behavioral analysis. Businesses that fail to adapt risk being blindsided by sophisticated impersonation scams in 2025.
With cyberattacks evolving at breakneck speed, companies must take proactive steps to secure their networks. The expansion of remote work, cloud adoption, and AI-driven threats has widened the attack surface, making traditional security models increasingly obsolete. From deepfake scams to software vulnerabilities, here are the top 10 cybersecurity trends that are poised to define 2025.
Artificial Intelligence (AI) is rapidly transforming cybersecurity on both sides of the fight. 74% of businesses now say AI is essential for threat detection and response. AI-powered tools help organizations identify vulnerabilities faster and predict potential threats before they can be exploited.
Meanwhile, cybercriminals are weaponizing AI to create adaptive malware, hyper-personalized phishing scams, and deepfakes that evade traditional defenses. Comcast’s analysis of 29 billion cybersecurity events in 2023 found over 2.6 billion phishing interactions, with more than 90% directing victims to malware-hosting sites. To counter these evolving threats and strengthen their defenses, organizations are investing in AI-driven threat detection, machine learning models that anticipate attack patterns, and automated response systems that neutralize threats before they cause damage.
The traditional network perimeter is disappearing, making it easier for attackers to bypass outdated security models. In response, Zero Trust network access is now the fastest-growing segment in network security. Due to growing security and efficiency concerns, 70% of corporate remote access deployments are expected to transition from VPNs to Zero Trust architectures this year.
Built on the principle of "never trust, always verify," the Zero Trust framework enforces continuous identity verification, strict access controls, and real-time threat detection, drastically reducing the risk of unauthorized access. As ransomware attacks become more convincing, Zero Trust provides a proactive defense by limiting lateral movement within networks and minimizing potential damage before breaches can spread.
Quantum computing is on the brink of transforming cybersecurity, creating both unprecedented threats and groundbreaking defenses. While this technology is still developing, experts warn that organizations cannot afford to wait until quantum computers become powerful enough to break today’s encryption methods.
Current encryption methods are expected to become obsolete within the next decade, making post-quantum cryptography (PQC) a priority. Governments and cybercriminals may already be harvesting encrypted data today to decrypt later when quantum capabilities mature.
Third-party vendors have become the weakest link in cybersecurity, providing attackers with a backdoor into larger organizations. Cybercriminals are increasingly exploiting supply chain vulnerabilities to bypass direct security measures, leveraging compromised vendors to gain access to sensitive data, operational systems, and critical infrastructure. In response, businesses are implementing stricter security requirements, real-time risk monitoring, and more rigorous third-party assessments to mitigate these threats.
High-profile supply chain attacks, such as those targeting software providers, cloud services, and manufacturing partners, have demonstrated the cascading effects of a single weak link. To protect themselves, organizations are establishing Zero Trust principles for third-party access, enforcing continuous security scans, and demanding stronger compliance measures from their vendors.
Ransomware attacks are accelerating, fueled by RaaS, which gives cybercriminals plug-and-play hacking tools. The numbers are staggering:
To mitigate this growing threat, organizations are implementing robust backup solutions, incident response plans, and continuous security monitoring.
The global regulatory environment is becoming more fragmented, with new cybersecurity laws and data protection regulations emerging across different jurisdictions. Compliance is now a competitive advantage for businesses that can demonstrate security maturity and build trust with customers and partners.
As governments impose stricter compliance requirements, organizations are taking a proactive approach by continuously updating security policies, conducting regular inspections, and aligning data protection measures with global standards. Businesses operating across multiple regions face additional challenges as they navigate overlapping or conflicting regulations, from the General Data Protection Regulation (GDPR) in Europe to evolving federal and state laws in the U.S.
The global cybersecurity workforce shortage has reached nearly 4 million unfilled positions, leaving organizations struggling to defend against growing threats. Despite high salaries and career growth opportunities, companies still face severe hiring challenges. Overly demanding job descriptions and outdated education programs further widen the gap.
Burn out is also a major issue, with 99% of Chief Information Security Officers (CISOs) working overtime regularly, driving high turnover and talent shortages. To address this crisis, businesses are shifting to skills-based hiring, launching reskilling programs, and prioritizing employee retention to build a more resilient cybersecurity workforce.
With remote work and cloud services skyrocketing, identity is now the frontline of cybersecurity. Organizations are prioritizing Identity and Access Management (IAM) solutions to verify that only authorized individuals can access critical systems, reducing the risk of credential-based attacks.
Multi-factor authentication (MFA), biometric verification, and AI-driven access controls are now essential components of modern security strategies. By securing identities, businesses can decrease breaches caused by stolen credentials, prevent lateral movement by attackers, and strengthen overall cyber resilience.
As more companies move operations to the cloud, traditional security strategies no longer cut it. Leading businesses are investing in:
With cloud security becoming a top priority, CSPM adoption is set to rise sharply as organizations focus on strengthening their defenses and reducing misconfigurations.
As AI plays a bigger role in cybersecurity, concerns around bias, security risks, and regulatory compliance are growing. Organizations are implementing governance frameworks, security attestations, and AI oversight to promote ethical and responsible AI deployment. Without governance, AI-driven security could introduce new vulnerabilities rather than solve them.
Additionally, emerging regulations will require businesses to demonstrate transparency in AI decision-making, making governance a key factor in compliance. Proactive AI governance builds trust with customers, stakeholders, and regulatory bodies.
AI-driven attacks, social engineering scams, and supply chain vulnerabilities will continue to evolve, putting businesses at greater risk in 2025. Organizations that don’t implement adaptive security measures, such as AI-powered threat detection and Zero Trust architectures, may find themselves unprepared for the next wave of cyber threats.
With over 3,000 cybersecurity vendors in the market, finding the right one can be overwhelming. That’s where Elliott Davis comes in. Our experienced cybersecurity team provides tailored guidance and cutting-edge solutions to help you safeguard your business from emerging risks.
We offer:
Most businesses don’t realize they have a cybersecurity gap until it’s too late. Contact us today for a cyber resilience assessment to prepare for the threats of 2025 before they disrupt your business.
The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.
By Bret Pittman and Caroline Van Hook
The current estate tax exemption expansion, which is set to expire for estates and gifts dated after December 31, 2025, presents wealthy families a window of opportunity to transfer substantial assets to descendants tax free. The exemption for 2024 is $13.61 million for individuals and $27.22 million for married couples. In 2025, that amount will increase to 13.99 million for individuals and 27.98 million for married couples.
The 2017 Tax Cuts and Jobs Act (TCJA) provision that raised the exemption amount is set to expire on January 1, 2026, leaving the exemption to revert to its pre-TCJA level, which, adjusted for inflation, will be about $7 million for individuals and $14 million for married couples. However, with the results of the 2024 presidential election, the 2017 TCJA provision will likely be extended with a Republican majority in both the House and Senate. If an extension is passed, it will likely be in effect through the end of 2026.
The estate tax is a federal tax imposed on the transfer of property upon one’s death. It applies to the fair market value of an individual’s assets at the time of death. The estate tax is generally 40% of the value of assets in excess of the exemption. Estates valued at less than the exemption for the year of the grantor’s death are not subject to the estate tax at all. The tax rates start at 18% and quickly rise to the maximum of 40%.
For families with significant shares of stock in private companies, the increased estate tax exemption presents an opportunity to transfer greater wealth to descendants of the estate without triggering estate tax liabilities, provided the total value of the transferred assets falls within the exemption limit. Individuals take advantage of the increased gift and estate tax exclusion by gifting assets during their lifetime. This effectively removes the assets from the donor’s gross estate when they pass. Gifts over the annual exclusion reduces the lifetime gift and estate exemption. Moreover, the IRS recently clarified in Treasury Decision 9884 that individuals taking advantage of the increased gift and estate tax exclusion amounts in effect from 2018 to 2025 will not be adversely impacted if their death occurs after 2025 when the exclusion amount is scheduled to revert to pre-2018 levels. In other words, if one gifts the assets while the current rules are in place, but dies after the sunsetting of those rules, the current rules will still apply. This guidance provides additional comfort to individuals planning to take advantage of the opportunity to use the existing estate tax exemption.
Another significant benefit available to individuals seeking to use the estate tax exemption to gift private company stock is the valuation discount methods applied to private companies. To properly gift stock in a private company by use of the estate tax exemption, the individual making the gift must first have the stock valued. The individual gifting the stock will be required to file a Form 709 Gift Tax return with the IRS verifying the value of the gifted stock.
When valuing a private company, most valuation experts apply significant discounts to the reported valuation where the transfer involves a minority (non-controlling interest) in the company’s stock. These discounts are known as the lack of marketability and the lack of control discounts. They are applied because there is no public market for stock in a private company and because minority shareholders do not have the power to control the future strategic decisions of the company. Depending on the circumstances, the discount rate used by the valuation expert can be significant, extending another benefit to the individual making the gift.
Jim and Kate Smith are the founders of a food production business (“Foodco”) that operates in six states. They own all 1,000 shares of the outstanding stock. A recent third-party appraisal of Foodco estimates its fair market value at $40 million. The Smiths intend to continue operating the business for another 10 years but would like to transition some of the ownership to their two children while retaining majority owner status.
They can transfer to their two children equal amounts totaling up to 49% (or 490 shares) valued at $19.6 million entirely tax free in 2024 because Jim and Kate (as husband and wife) together have a $27,220,000 exemption to work with. Using the recent $40 million fair market valuation of Foodco, the Smiths can request an updated valuation for the transfer of a non-controlling (or minority) interest in the business. A typical valuation result would apply somewhere in the range of a 20% discount for the transfer of a non- controlling interest such that, for purposes of filing a Form 709 Gift Tax return, the $19.6 million may be reduced by as much as $3,920,000 to $15,680,000.
The total gift of shares valued at $15.68 million is tax free. But if the same transaction occurred after Dec. 31, 2025, about $1.68 million will be subject to tax, assuming no extension to the increased gift tax exemption. This would equate to about $617,000 of tax.
Practitioners should address the following matters with clients who are considering using the estate tax exemption to gift private company stock:
The use of the estate tax exemption for passing stock in a family-owned company from parents to children is a powerful estate planning tool that helps families preserve and transfer wealth.
The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.
