Article Posted on 02/07/2019
On December 12, 2017 (note 2017) Congress passed the massive Tax Cuts and Jobs Act of 2017 (TCJA). Part of the act was the creation of Section 199A which allowed businesses, with some exceptions and criteria, to deduct 20% of their net business income. Over the last 12 months we, and other tax planners have been interpreting the new rules and advising clients on how to structure their operations to be in compliance with the new rules and to minimize their tax liability. The IRS, who is charged with issuing regulations on the new law, issued proposed regulations in August, 2018 and the final regulations on Section 199A on January 18, 2019 (note 2019). With the gap of over a year between the passing of the law and the issuance of the final regulations, there were some big surprises that most professionals did not anticipate.
How in the world can you follow the rules if you don’t know what the rules are? We are now dissecting the new regulations to see how it impacts the planning that we did for the 2018 year. We are working hard to identify what options our clients have as we prepare 2018 tax returns and plan for the future.