30 THE QUEENS COURIER • AUGUST 30, 2018 FOR BREAKING NEWS VISIT WWW.QNS.COM
IRS has a cure for the summer
tax doldrums. Guidance on a
complicated new tax break…the 20%
write-off for pass-through income.
The Service’s highly anticipated
proposed regulations define
terms, provide operational rules
and examples, and address some
unsettled issues in the legislation.
They’re long and complex, coming
in at 184 pages.
Summer Tax Doldrums
The break applies to self-employed
people and people who own passthrough
entities: LLCs, partnerships,
S corporations and some trusts. Many
of these individuals can deduct 20%
of qualified business income. QBI is
your allocable share of the income less
deductions from the trade or business.
It doesn’t include capital gain, capital
loss, dividends, nonbusiness interest
income, reasonable compensation
from S firms or guaranteed payments
If you have multiple businesses, you
generally determine QBI separately.
But commonly owned similar
activities may be aggregated for
this purpose if certain requirements
set forth in the Service’s proposed
regulations are satisfied.
Two special limitations apply to
individuals with higher taxable
incomes…in excess of $315,000
for couples filing a joint return and
$157,500 for all others.
First the break phases out for
high-incomers in specified service
businesses: Health, law, accounting,
actuarial science, performing arts,
consulting, athletics, financial,
brokerage, investment management
and securities trading and dealing. If
you’re in one of those service fields
and your taxable income exceeds
$415,000 for joint returns…$207,500
for all others…the deduction is zero
for that business.
The regs delve into each service field and
provide lots of exceptions and rules. For
example, health clubs, real estate brokers
and insurance agents are excluded.
Businesses with little service income get
relief under a de minimis rule. Firms
of $25 million or less of gross receipts
aren’t specified service businesses if
less than 10% of their gross receipts
are attributable to performance of
services in a specified service field.
The de minimis percentage drops to
5% for larger businesses.
There’s an important easing for
other, non-specified service
businesses…those that don’t
fall within the service fields
above, but where the principal
asset of such trade or business
is the reputation or skill of
its employees or owners. IRS
interprets the “reputation or
skill” clause narrowly to apply
to endorsements’ license of an
individual’s image, likeness, voice
and the like; and appearance fees.
Second, there is a W-2 wagespaid
limitation for high-income
individuals that applies even
if the person isn’t engaged in a
specified service business. It caps
the deduction at the basic 20% of
QBI from the business or, if lower, a
figure that looks at W-2 wages paid
by the business and the unadjusted
basis of tangible, depreciable
property used in the business and
not fully depreciated.
Attorney At Law
25-59 Steinway Street
Astoria, NY 11103
BEST PERSONAL INJURY
Aldo’s Democratic Members
fundraiser for Senator Jose Peralta
On Tuesday August 22, Aldo’s Democratic Members held a
Fundraiser for Senator Jose Peralta at Telly’s Taverna in Astoria.
Present were President Jerry Fragias, Vice President Majibur
Rahman, Executive Leader John Ciafone and Former Board 1
District Manager George Delis.