August 15, 2018 § Leave a comment
On August 8, the IRS released proposed regulations around the Qualified Business Income Deduction (“QBID”) which allows certain taxpayers to claim a 20% deduction on their qualified business income (“QBI”) from sole proprietorships, S corporations, and partnerships that pass-through income to the owners. All passthrough businesses will qualify for the 20% QBI deduction if taxable income is below $157,500 for single taxpayers and $315,000 for married filing joint taxpayers. The 20% QBI deduction for specified service trade or businesses (addressed below) starts to phase out once taxable income is above these amounts and the deduction is reduced to zero if taxable income reaches $207,500 for single taxpayers and $415,000 married filing joint taxpayers. These regulations provide much needed guidance around the deduction and clear up many questions that arose when the Tax Cuts and Jobs Act was signed into law in December of 2017.
Here are some of the areas where the IRS addressed outstanding questions that many tax professionals had:
- Aggregation of Activities – A taxpayer is permitted to aggregate activities for purposes of the QBID, but those activities must meet certain tests.
- Basis of Property – The unadjusted basis of property used for the QBID is determined before any bonus depreciation or Section 179 immediate expensing.
- Previously Suspended Losses – If a taxpayer carries forward previously suspended losses and uses that against income, those losses are not factored into the QBID.
- Specified Service Trade or Business – The IRS addressed many of the concerns tax professionals had and defined many of these businesses in detail. Specifically, the IRS gave detail into the following fields that are not eligible for the 20% QBI deduction if the owner’s taxable income exceeds the thresholds mentioned above: health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, investment and investment management, trading, and dealing in securities.
- W-2 Wages – For purposes of calculating the QBID, wages paid through a common paymaster or Professional Employer Organization (PEO) do count.
- 1231 Gains/Losses – To the extent these gains or losses are treated as capital gains or losses on the individual’s return (after netting), they are not included in the QBID. If the 1231 gains or losses are treated as ordinary income/loss, they are included in the QBID.
While these proposed regulations provide many answers to questions, there are still outstanding issues to work through. However, this is a great start that can be used for planning opportunities today. Please contact us to see how we can help you maximize this potential deduction. We will continue to provide communication in future weeks as issues are resolved.
August 2, 2018 § 1 Comment
WEST DES MOINES, IOWA (August 2, 2018) – McGowen, Hurst, Clark & Smith, P.C. (MHC&S) was recently named as one of the 2018 Accounting Today’s Best Accounting Firms to Work for. Accounting Today has partnered with Best Companies Group to identify companies that have excelled in creating quality workplaces for employees.
This survey and awards program is designed to identify, recognize and honor the best employers in the accounting profession, benefiting its economy, workforce and businesses. The list is made up of 100 firms.
To be considered for participation, firms had to fulfill the following eligibility requirements:
- Must be an accounting firm;
- Have a facility in the United States;
- Have a minimum of 15 employees working in the United States;
- Must be in business a minimum of 1 year
Firms from across the United States entered the two-part survey process to determine Accounting Today’s Best Accounting Firms to Work for. The first part consisted of evaluating each nominated company’s workplace policies, practices, philosophy, systems and demographics. This part of the process was worth approximately 25% of the total evaluation. The second part consisted of an employee survey to measure the employee experience. This part of the process was worth approximately 75% of the total evaluation. The combined scores determined the top firms and the final ranking. Best Companies Group managed the overall registration and survey process, analyzed the data and determined the final ranking.
“The firms on this list represent the best workplaces in the accounting profession,” said Accounting Today Editor-in-Chief Daniel Hood. “They are outstanding places to build a career.”
“We are so happy to be recognized again this year with this amazing award. Our firm is an outstanding place to work due to our leaders modeling the way for us in how they serve others on a daily basis,” said Cindy Wubben, MHC&S Director of Human Relations.
Six out of the 100 firms are CPAmerica Members which includes MHC&S. “We are excited to congratulate all of our firms who have been recognized by Accounting Today,” said Alan Deichler, president of CPAmerica. “The commitment that these firms have made to being great firms to work for is very impressive.”
For more information on Accounting Today’s Best Accounting Firms to Work for program, visit http://www.BestAccountingFirmsToWorkFor.com.
As one of the most established and largest local accounting firms in central Iowa, MHC&S (www.mhcscpa.com) has provided assurance and accounting services, tax planning and preparation services, and business consulting services to individuals and businesses for nearly 75 years. In addition to the traditional service, MHC&S offers specialized services including estate planning, fraud detection, deterrence and Red Flag Reporting, QuickBooks consulting, business valuations, cost segregation studies, financial advisory services, succession planning, and more. The firm has earned the distinction of being named one of the Best Accounting Firms To Work For in the nation by Accounting Today for five of the past six years, Des Moines Business Record’s annual “Best of Des Moines Event-Accounting Category” nine of the past eleven years, as well as Des Moines Register’s top 100 Workplaces in Iowa in 2014, 2015, 2016, and 2017 in Small Business. In 2017, we also were named the Best Company in Iowa for Work/Life balance.
For more information, please contact Gina David, Marketing Director, at (515) 288-3279 or firstname.lastname@example.org.