The Tax Cuts and Jobs Act (P.L. 115-97), enacted Dec. 22, 2017, created, under Section 199A, a new deduction for up to 20% of qualified business income (QBI) from partnerships, limited liability companies (LLCs), S corporations, trusts, estates, and sole proprietorships for tax years beginning after Dec. 31, 2017. However, determining the Section 199A deduction amount and availability is a very complex multi-step process that may phase out some or all of the deduction. In the face of this complexity, the text provides a selected overview of the basic components of this below-the-line deduction. Qualified business income, taxpayer’s taxable income, wage/capital limit, specified services trade or businesses, and other key components are not only defined and calculated but their interaction is demonstrated and exampled.
Pass-through Business Deduction. Section 199A.
CPAs, financial professionals, enrolled agents and attorneys.
Recognize Section 199A’s limited effective time period, it’s complex calculation process and the general exclusions, limits, and restrictions applicable to the provision. Determine the Section 199A deduction amount, the type of W-2 wages used in calculating the wage/capital limit and specify how the limit impacts the amount and availability of the deduction. Identify qualified business income and loss, its basic components, and the ability of a taxpayer to aggregate businesses in its determination. Recognize the specified services trade or business exclusion, the listed excluded services and the important exceptions provided by the regulatory de minimis rule. Identify a domestic trade or business.
Danny Santucci, Western CPE
Danny Santucci, BA, JD, is a prolific author of tax and financial books and articles. His legal career started with the business and litigation firm of Edwards, Edwards, and Ashton. Later he joined the Century City entertainment firm of Bushkin, Gaims, Gaines, and Jonas working for many well-known celebrities. In 1980, Danny established the law firm of Santucci, Potter, and Leanders in Irvine, California. With increasing lecture and writing commitments, Danny went into sole practice in 1995. His practice emphasizes business taxation, real estate law, and estate planning. Speaking to more than 100 groups nationally each year, he is known for spicing up his extensive expertise with an incredible sense of humor.
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