Tax Law Insights

The new 20% deduction for "pass-through" business owners under the Tax Cuts and Jobs Act is raising many questions from owners of real estate-related businesses. Can these owners qualify for this important deduction, and under what conditions?

For most pass-through business owners (such as owners of LLCs, Subchapter S corporations, and partnerships), the deduction is the lessor of (1) the "combined qualified business income" of the taxpayer, or (2) 20% of the excess of taxable income over the sum of any net capital gain. The term "combined qualified business income" is then defined ...