What You Need to Know About the 20% Pass-Through Deduction

Filed in Codes and Regulations, Tax Reform Toolkit by on September 4, 2018 0 Comments

The Tax Cuts and Jobs Act signed into law late last year created a new section of the tax code that provides a 20% deduction for “qualified business income” generated by pass-through entities such as LLCs, partnerships and S-corporations.

The law went a long way to help small business owners compete, but lefty a bevy of unanswered questions.

Though some questions remain, the IRS provided significant clarity last month when it published proposed regulations and a related notice regarding the 20% pass-through deduction.

In a recent Eye on Housing blog post, tax economist David Logan highlights key sections on some of the most important IRS updates. Logan’s analysis covers:

  • What to account for when determining qualified business income;
  • The treatment of investment income;
  • Compensation for services;
  • The definition of “trade or business” and rental income;
  • Deduction disallowed for income derived from a “specified service trade or business;”
  • Limitations on high-income earners; and
  • The depreciable property test and like-kind exchanges.

Read the Eye on Housing blog post.

For additional information, contact David Logan at 800-368-5242 x8448.

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