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Board Member and Advisory Committee Chair Tom Nichols represented S-Corp in Tuesday’s IRS hearing on Section 199A. Tom was one of 26 witnesses to testify.  As Tax Notes summarized: Thomas J. Nichols of Meissner, Tierney, Fisher & Nichols SC said when taxpayers have losses from one trade or business and income from another, they are required to aggregate those amounts to determine the deduction amount, even though aggregation isn’t mandated when determining whether Form W-2 wages and basis in property can be combined. Instead, taxpayers must jump through several hoops to determine if they can aggregate those businesses, Nichols added. ...

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Everything has its season, and for tax reform, this is the season of sending comments to Treasury.  This week, the S Corporation Association submitted comments on Treasury’s proposed rules implementing the so-called “toll charge” repatriation tax under Section 965. To recap, one of the selling points of tax reform was the move from a system that taxed all the income of U.S. taxpayers, regardless of where it was earned, with a system that focused primarily on taxing income earned with our borders.  This new territorial approach was supposed to make U.S. businesses more competitive overseas.  Only time will tell whether ...

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The S Corporation Association today submitted comments on Treasury’s proposed rules implementing the new, 20-percent pass-through deduction. S-Corp readers know the 20-percent deduction was designed to preserve rate parity between pass-through businesses and the new, 21-percent rate on S corporations.  But how is the deduction going to be calculated?  How many pass-through businesses will qualify?  Our comments kick off by emphasizing just how important the deduction is to keeping Main Street competitive. As our recent EY study made clear, pass-through businesses receiving the full deduction still will pay an effective tax rate that is 1.3-percent higher than the rate paid ...

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It’s not late Friday afternoon, so why is Treasury releasing important new rules on the pass-through deduction?  We’re not sure, but we like it! The rules themselves look pretty good too, and our members’ initial reaction to the rules was mostly positive.  Here’s the statement S-Corp released earlier today:  “Treasury’s proposed rules are a good start to making the pass-through deduction workable for Main Street businesses.  There are many important details to clarify and we have specific concerns about some of the definitions and reporting requirements, but the overall approach taken by Treasury is positive and should be applauded.  Our ...

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The S Corporation Association participated in a Hill briefing Tuesday highlighting new work for Ernst & Young on the challenge of establishing parity for pass-through taxation. The analysis, authored by Robert Carroll of EY, focused on all the complexities confronting pass-through businesses under the Tax Cuts and Jobs Act, and the resulting matrix of possible tax outcomes for pass-through businesses.  As the table shows. Effective tax rates on successful S corporations (and other pass-through businesses) are consistently higher than the average C corporation, even after adjusting for the double corporate tax and other variables. These findings are particularly important right ...

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