New Tax Regulations May Affect Your Business

Last year, Congress tackled the tax reform, and made some major changes. The new tax laws permanently lowered the tax rates for corporations, but rates remained higher for individual taxpayers. Because that could prove problematic for sole proprietors and owners of pass-through businesses, Congress provided a workaround. A tax deduction of up to 20% was set in place to help lower the rate. This raised a number of questions, and spurred many new regulations.


This deduction is available for sole proprietors and business owners with a pass-through business, or a business that does not pay corporate income tax at the entity level but instead passes income and expenses to the owners. The deduction also applies to certain trusts and estates.


This deduction is intended the lower the amount of taxable income that can be attributed to your business. It is generally either 20% of your qualified business income (QBI) plus 20% of your qualified real estate investment trust (REIT) dividends and qualified publicity traded partnership income, or 20% of your taxable income minus net capital gains.


This deduction is only available to taxpayers whose 2018 taxable incomes fall below $315,000 for join returns and $157,500 for other taxpayers. If you are above these threshold amounts, then you are subject to limitations and exceptions.


Depending on the type of business that you own, there may be many other regulations that you have to consider. There are 184 pages of proposed regulations from the IRS. This may seem daunting, and it would be extremely time consuming for any business owner to search through these pages to find specific regulations that apply to his or her business. Thankfully, if you have a commercial litigation attorney providing counsel for your business, you don’t have to worry. Your attorney will find the regulations that apply to your business and explain them to you, so that you can receive the maximum tax benefits for your business.


Do you have a commercial litigation attorney advising you for all of your business needs? If the answer is no, then contact us here at KFB-Law to get in touch with an attorney that can help you with your litigation concerns!