Qualified Business Income (Pass-Through) Deduction Under the Tax Cuts and Jobs Act
Few provisions in the recently enacted Tax Cuts and Jobs Act are likely to have a greater impact or create more confusion than the new Code Sec. 199A deduction for noncorporate taxpayers for qualified business income (also referred to as the "pass-through deduction"). Put simply, the deduction, effective for tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, is generally 20% of a taxpayer's qualified business income from partnerships, S corporations, or sole proprietorships (i.e., the net amount of items of income, gain, deduction, and loss with respect to the trades or businesses).
However, very little about the deduction, with its limitations, phaseouts, thresholds, and special definitions is simple. This special report dives deeper into some of these intricacies so you can be ready to explain the new rules to your clients when they have questions.