parity - The S Corporation Association

Section 199A Deduction Needed to Provide Pass-Throughs Tax Parity with C Corporations

A new presentation on the Section 199A deduction from the Joint Committee on Taxation has gotten people’s attention, particularly this slide:

The slide prompted Senator Ron Wyden, the Ranking Member on the Senate Finance Committee, to observe, “These are not the struggling small business owners we were told this provision would benefit.”

The Ranking Member’s response is misdirected, however. The 199A deduction was not an effort to reduce taxes on small businesses, but rather an attempt to maintain tax parity for pass-through businesses of all sizes. Without 199A, Main Street …

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admin2021-08-16T14:01:56+00:00March 18, 2019|

The Legal Case for Pass-Through SALT Parity

Last week, Bloomberg published a report that got our attention. Entitled, “IRS May Knock down New York, Connecticut SALT Workarounds,” the article says the IRS is “likely” to issue regulations that invalidate SALT workarounds.

The reference to New York didn’t surprise us. It’s no secret the IRS is targeting the charitable workaround adopted by New York and other states – they already issued guidance last fall throwing sand in the gears of that one. But the pass-through SALT parity bills passed by Connecticut and Wisconsin are entirely different, both legally and politically.

Why can C corporations deduct all …

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admin2019-03-14T16:58:06+00:00March 14, 2019|

Ryan Rolls Out New Ways & Means Committee

Main Street business tax treatment was a big theme during the Ways & Means Committee’s first hearing of the year. Its purpose was to look at the state of the economy, but key members kept raising the question of how to best treat pass-through businesses in tax reform. Carrying the flag for S corps was our longtime S-CORP Champion Dave Reichert (R-WA):

Reichert (1:53:00): In another area where we have the ability to boost our economy – through tax reform, as has been mentioned, and which would benefit businesses large and small — what about pass-through businesses…which face a …

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admin2019-02-01T20:00:11+00:00January 16, 2015|

S Corps More Efficient

We have long argued that the American economy benefits from allowing entrepreneurs multiple business forms from which to choose.

Each business has its own unique capital, management, governance, and transition challenges, and allowing those businesses to choose between C corporations, S corporations, LLCs, partnerships, and sole proprietorships enables them to pick the structure that best suits their needs.

New data from SNL Financial focused on banks suggests entrepreneurial choice may also contribute to a bigger economy. As described in American Banker:

The return on assets at the median S corp has consistently outdistanced the median for C corps by a wide margin over …

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admin2019-02-01T20:21:27+00:00June 26, 2012|

Wall Street Journal Misleads its Readers

Two weeks ago, the Wall Street Journal ran a front-page piece entitled, “More Firms Enjoy Tax-Free Status.” While you could argue the story itself was less biased than the headline, its overall bent leaves the very strong impression that S corporations and other pass through businesses pay no taxes. The subsequent interview of the author on WSJ Live is even worse:

Author: The vast majority of US businesses essentially don’t have to pay any tax. They are organized as what are called pass-throughs, meaning that there’s no tax paid by the enterprise; instead the tax is paid by the owners …

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admin2019-02-01T20:21:29+00:00January 24, 2012|