Christine Hradsky No Comments

How “Aggregating” Businesses Can Boost Your QBI Deduction

Aggregating

The IRS recently issued proposed regulations that explain how and when aggregating works for purposes of computing the QBI deduction and the deduction limitations based on W-2 wages and the basis of qualified property.

Recently proposed IRS regulations provide aggregation rules that allow eligible individuals to “aggregate” their businesses in order to maximize the new qualified business income (QBI) deduction. Specifically, they may be able to combine income, W-2 wages and the unadjusted basis immediately after acquisition (UBIA) of qualified assets from qualified businesses conducted as pass-through entities. Here’s some background material, along with examples, on how this aggregation strategy can work. Read more

Christine Hradsky No Comments

QBI Deduction Provides Tax Break to Pass-Through Entity Owners

QBI Deduction

A new tax deduction for qualified business income from pass-through entities might offer temporary relief for pass through entities that won’t benefit from the reduced federal income tax rate.

The IRS recently issued proposed reliance regulations to help clarify the new qualified business income (QBI) deduction that was introduced as part of the Tax Cuts and Jobs Act. This guidance is complex and hundreds of pages long. As part of the proposed regs, the IRS explained that, if certain requirements are met, individuals, estates and trusts (all referred to as “individuals” by the proposed regs) that own interests in more than one qualifying trade or business can (but aren’t required to) aggregate them, by treating them as a single trade or business. Read more