A New Deal: The Business Income Tax Deduction Under the TCJA
A short-and-sweet explanation of the not-so-short-and-sweet new law: Any taxpayer that owns an interest in a pass-through entity may qualify for up to a 20 percent income tax deduction on the income of that business.
November 30, 2018 at 06:06 PM
5 minute read
The Tax Cut and Job Act of 2017, which took effect on Jan. 1, 2018, made a number of significant changes in the wonderful world of tax law. Among the exciting new changes set forth in the new regime is a brand new income tax deduction for tax-savvy business owners who own their interests in pass-through entities (i.e., partnerships, LLCs, S-corporations and sole proprietorships).
A short and sweet explanation of the not-so-short-and-sweet new law: Any taxpayer that owns an interest in a pass-through entity may qualify for up to a 20 percent income tax deduction on the income of that business.
Simple, right? In some cases, yes. In others, a resounding no. The applicable Code section (I.R.C. § 199A) treats different taxpayers differently with respect to this deduction. Whether the deduction applies at all and to what extent it applies depends on a variety of factors including the total income of the taxpayer, type of business in which the taxpayer is engaged, wages paid by the taxpayer's business and property owned by the taxpayer's business.
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Trending Stories
- 1The Law Firm Disrupted: For Big Law Names, Shorter is Sweeter
- 2Wine, Dine and Grind (Through the Weekend): Summer Associates Thirst For Experience in 'Real Matters'
- 3'That's Disappointing': Only 11% of MDL Appointments Went to Attorneys of Color in 2023
- 4What We Know About the Kentucky Judge Killed in His Chambers
- 5'I'm Staying Everything': Texas Bankruptcy Judge Halts Talc Trials Against J&J
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250