199A TCJA - 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 …

(Read More)

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

199A Pass-Through Deduction Rules Finalized

Treasury issued the final rules on 199A earlier this month. You can read the rules and accompanying guidance here:

You can also read a terrific “how does it all work” review published in Forbes the other day. As the writer notes:

I believe in giving credit where credit is due, and …

(Read More)

admin2021-08-16T14:02:03+00:00January 30, 2019|

Tax Reform Overview

From the corporate perspective, the early returns on the new tax bill are promising. The markets certainly like the lower corporate tax rate and dozens of public companies have announced tax-cut related investments, wage hikes, and bonuses. For the corporate world, the new law appears to be doing exactly what its authors hoped for.

But what about Main Street businesses? Will they benefit from the new law? There, the outlook is much more complicated. C corporations got a rate cut. Pass-through businesses got a 20-percent deduction. The deduction is helpful, but it is smaller than the rate cut and it raises …

(Read More)

admin2021-08-16T14:02:07+00:00February 7, 2018|

S-Corp Concerns with Senate Tax Reform Bill

Top Line

The Framework and rhetoric leading up to its release indicated that Senate Leadership and the Finance Committee were committed to treating the millions of companies organized as pass-through businesses fairly in relation to C corporations. The Framework explicitly called for a rate differential of five percentage points, while previous Finance Committee work focused on leveling the playing field between C corporations and pass-through businesses by eliminating the double corporate tax and moving the entire business community towards a single, reasonable level of tax on all businesses.

Unlike much of the business community, S-Corp fully supported both efforts and expressed that …

(Read More)

admin2021-08-16T14:02:12+00:00November 11, 2017|

House Bill & S Corps

The House tax reform bill to be considered this week has a headline top rate of 25 percent for S corporations and other pass-through businesses, but in many cases the real rate is significantly higher. S corporation owners need to pay attention.

Here are some of key details:

Professional Services: First, the 25 percent rate doesn’t apply to professional service businesses. Specifically, the bill excludes businesses engaged in “the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, any trade or business where the principal asset of such …

(Read More)

admin2021-08-16T14:02:16+00:00November 6, 2017|