The Tax Cuts and Jobs Act, signed into law last December, provided qualified pass-through businesses with a 20 percent deduction, bringing the effective tax rate for those businesses down to 29.6 percent. The law established conditions that would have to be met for a company to qualify for the deduction, and it expressly excluded most service businesses.
Since enactment of the law, the Department of the Treasury has been writing the regulations necessary for implementation of the law and the 20 percent deduction. NAW has been engaged in the effort to achieve favorable rules by meeting with officials at the Treasury Department, the Office of Public Liaison at the White House, and the Office of Management and Budget.
This critical Section 199A proposed rule on the “Qualified Business Income Deduction” was released today.
While the proposed rule is of course complicated, our initial review finds it a positive step, especially the rules governing the ability of a pass-through business to aggregate income from multiple legal entities to qualify for the deduction.
The proposed rule will be open for public comment after it is published in the Federal Register.
Click here to read the proposed rule.