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Combining Businesses and Netting Losses for the Section 199A Pass-Through Deduction
The new Section 199A deduction can be up to 20% of qualified business income (QBI), but it is subject to limitations; including limits based on wages and qualified property. Many taxpayers will find that combining, or aggregating as the proposed regulations refer to it, will lessen the impact of the wage and property limitations. However, a taxpayer must satisfy certain criteria before businesses can be aggregated.
IRS Proposes Pass-Through Deduction Regulations
The highly anticipated regulations regarding the deduction for up to 20% of qualified business income (QBI) have been proposed by the IRS. The addition of Section 199A, which governs the pass-through deduction, was a major component of the new tax law that was passed last December.
IRS Issues Guidance on New Bonus Depreciation Rules
The Tax Cuts and Jobs Act (TCJA) significantly expands bonus depreciation under Section 168(k) of the Internal Revenue Code for both regular tax and alternative minimum tax (AMT) purposes. Now, the IRS has released proposed regulations that clarify the requirements that businesses must satisfy in order to claim bonus depreciation deductions. Although the regulations are only proposed at this point, the IRS will allow taxpayers to rely on them for property placed in service after September 27, 2017 for tax years ending on or after September 28, 2017.
Is More Tax Reform on the Horizon?
President Trump and Republican lawmakers currently are considering a second round of tax reform legislation as a follow-up to last year’s Tax Cuts and Jobs Act. As of this writing, no actual bill has been drafted, but a framework of what the tax package may contain has been released, which is referred to as Tax Reform 2.0.
Supreme Court Wants YOU to Collect Sales Tax: What Every Business Should do in the Wake of Wayfair
In South Dakota v. Wayfair, Inc., the U.S. Supreme Court handed down a landmark ruling giving state and local governments the green light to impose sales taxes collection requirements on out-of-state sellers. States must have some minimum contact with a business to justify imposing the burden of tax compliance on that business. This is referred to as the “nexus” required to impose a state’s tax law.
Watch Out for Tax-Related Identity Theft Scams Throughout the Year
With the filing date for 2017 in the rearview mirror for most businesses and individuals, the last thing you want to think about is income taxes. Unfortunately, criminals who commit tax-related identity theft do not work seasonally — they are constantly devising identity theft schemes. Although the IRS has taken successful steps to reduce tax-related identity theft in 2017, it cautions taxpayers to stay alert for scams year round, especially after the tax filing season ends.
Revised 2018 Employee Benefit Plan and Transportation Limits
On May 4, 2017, the Internal Revenue Service (“IRS”) announced the 2018 inflation-adjusted amounts for Health Savings Account (“HSA”) contributions that included a family coverage limit of $6,900. On March 5, 2018, the IRS reduced the 2018 contribution limit for family coverage from $6,900 to $6,850. This reduction was due to a provision in the Tax Cuts and Jobs Act.
IRS Sheds Light On New Limit On Business Interest Expense Deductions
The new tax law imposes a limit on deductions for business interest for taxable years beginning in 2018. The limit, like other aspects of the law, has raised some questions for taxpayers. In response, the IRS has issued temporary guidance in Notice 2018-28 that taxpayers can rely on until it releases regulations. While the guidance provides some valuable information, it also leaves some questions unanswered.
New Pass-Through Tax Provisions: The Devil is in the Details
The new tax law has been touted for cutting the corporate tax rate, but the law also contains some valuable benefits for businesses that operate as pass-through entities or PTE. Pass-through entities include partnerships, limited liability companies, S corporations and sole proprietorships. The potential benefits for owners of PTE are significant, but determining just how much they will benefit can be complicated.
Home Equity Interest Still Deductible for Many
The language of the new tax law led some to believe that interest on all home equity loans, home equity lines of credit and second mortgages was not deductible from 2018 through 2025. In response, the IRS issued a statement clarifying that the interest on will remain deductible based on how the proceeds were used and not how the loan is labeled.