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S-Corp Comments on Section 4960 Excise Tax

The S Corporation Association sent comments to the Department of Treasury today raising concerns that recent guidance it published has the potential to impose the new, Section 4960 excise tax onto private operating companies. The tax is supposed to be targeted at big non-profits and universities that pay their executives and coaches salaries in excess of $1 million per year, but due to expansive definitions of “employee” and “related organization” included in the department’s guidance (Notice 2019-09), the tax could be paid by many family businesses with related foundations and other charities instead. Worse, the new law is written in ...

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S-Corp Comments on Section 4960 Excise Tax2019-05-29T14:58:59+00:00

Tax Foundation Needs to Fix Their Map

The Tax Foundation has updated some of their data on pass-through businesses last week, including this nice map with state-by-state data on the percentage of jobs from pass-throughs, which is helpful.  As before, it shows that pass-through businesses employ the majority of private sector workers in every state of the country, including seven out of ten workers in Montana! On the other hand, this map purporting to show the marginal rates paid by pass-through businesses by state appears to illustrate only a small subset of pass-through businesses, and those towards the bottom end of the possible marginal rate range to ...

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Tax Foundation Needs to Fix Their Map2019-05-22T16:21:50+00:00

Business Community Rallies around 199A Permanence Bill

More than 100 business groups came out in support today of new legislation to make permanent the 20-percent pass-through deduction. Introduced by Senator Steve Daines (MT), the "Main Street Certainty Act of 2019" -- S. 1149 -- is the companion bill to H.R. 216, bipartisan legislation introduced by Representatives Jason Smith (MO) and Henry Cuellar (TX) in the House of Representatives. The new, 20-percent deduction was a key part of the big tax reform bill enacted back in 2017. The deduction was designed to balance out the tax treatment of pass-through businesses with the lower, 21-percent tax rate paid by ...

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Business Community Rallies around 199A Permanence Bill2019-05-29T21:38:51+00:00

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 businesses would face sharply higher tax rates than the C corporations ...

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Section 199A Deduction Needed to Provide Pass-Throughs Tax Parity with C Corporations2019-03-18T12:53:39+00:00

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 their SALT while ...

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The Legal Case for Pass-Through SALT Parity2019-03-14T16:58:06+00:00