skip to main content
X

Services

Tax

We’re committed to relieving the tax burdens of businesses, individuals, and families. With a careful assessment of your situation, our tax professionals develop a uniquely customized strategy for your tax planning needs with the objective of minimizing your tax liability. 

WILL MY BUSINESS QUALIFY FOR THE NEW 20 PERCENT "QUALIFIED BUSINESS INCOME" DEDUCTION?

January 11, 2018

WILL MY BUSINESS QUALIFY FOR THE NEW 20 PERCENT "QUALIFIED BUSINESS INCOME" DEDUCTION?

Under the recently signed Tax Cuts and Jobs Act, Congress added Section 199A, a new provision of the Internal Revenue Code that provides for a potential 20 percent deduction for an individual related to income from pass-through entities and other non-corporate tax structures. The deduction begins in 2018 and is scheduled to end after 2025.

In order to qualify for the new deduction, a taxpayer must 1) own an interest in a "qualified trade or business" that 2) generates "qualified business income". Qualified business income is best defined as the net amount of ordinary (non-investment related) income, gain, deductions and losses that are effectively connected with a trade or business. Generally speaking, if your company is a brick and mortar, capital-based business (with employees, ideally), your business will likely qualify for the Section 199A deduction. Real estate professionals and lessors may also benefit from this new deduction. 

One caveat though... the new law disqualifies "specified service trades and businesses". These businesses include most of the traditional white collar professions (medicine, law, accounting, actuarial science, financial services and consulting). Paid athletes and performing artists are also deemed non-qualified. Taxpayers that operate in these service-based industries could have their deduction severely limited or eliminated altogether.

As with many provisions within the law, there are limitations as to whether an individual qualifies for the deduction and the amount. There are also many significant ambiguities in the language contained in Section 199A. Therefore, as with all taxes, proper planning is necessary to maximize the amount of deduction.

Please consult your tax professional at UHY Advisors in one of our many locations.

Hide Firm Disclaimer

©2020 UHY LLP. ALL RIGHTS RESERVED.

UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of "UHY Advisors." UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. UHY LLP and UHY Advisors, Inc. are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. "UHY" is the brand name for the UHY international network. Any services described herein are provided by UHY LLP and/or UHY Advisors (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.

On this website, (i) the term "our firm", "we" and terms of similar import, denote the alternative practice structure conducted by UHY LLP and UHY Advisors, Inc. and its subsidiary entities, and (ii) the term "UHYI" denotes the UHY international network, in each case as more fully described in the preceding paragraph.