Can Your Trust or Estate Take Advantage of the Section 199A Planning? Elementary, My Dear Watson

The Section 199A deduction is a deduction from adjusted gross income and is the last deduction taken in determining taxable income. Generally, the Section 199A deduction is equal to the lesser of 20% of the taxpayer's Qualified Business Income (QBI) or 20% of the excess of the taxpayer's t...

Full description

Saved in:
Bibliographic Details
Published in:Estate Planning 2023-12, Vol.50 (12), p.24-39
Main Authors: Yuhas, Michael, Radom, Carl C
Format: Article
Language:English
Subjects:
Business income
C corporations
Capital gains
Disregarded entities
Employees
Estate planning
Independent contractors
Net income
Sole proprietorships
Stockholders
Taxable income
Taxpayers
Trusts
Wages & salaries
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:The Section 199A deduction is a deduction from adjusted gross income and is the last deduction taken in determining taxable income. Generally, the Section 199A deduction is equal to the lesser of 20% of the taxpayer's Qualified Business Income (QBI) or 20% of the excess of the taxpayer's taxable income less the taxpayer's net capital gain for the year. There is no requirement that an individual have an active role in the trade or business. [...]a passive owner of an active trade or business would be entitled to the deduction. The term SSTB includes any trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of 1 or more employees or owners.21 It is noteworthy that architect and engineer services are excluded from being considered SSTBs.22 The regulations provide a de minimis rule providing that a small amount of service activity will not thrust a trade or business into the SSTB category.
ISSN:0094-1794