Qualified Business Income: A Summary of the Provision in the Tax Cuts and Jobs Act
As part of the Tax Cuts and Jobs Act signed into law on December 22, 2017 a new deduction is made available to taxpayers other than corporations that is based on passthrough income. In this case, passthrough includes not only income from a partnership or S corporation, but also income from any unincorporated trade or business operated by the taxpayer.
The deduction is the total of:
- The “combined qualified business income amount” of the taxpayer (subject to an adjusted taxable income limit) plus
- 20% of the aggregate amount of qualified cooperate dividends (subject to a separate adjusted taxable income limit)
The qualified business income deduction is not adjusted for preferences and adjustments in the computation of alternative minimum taxable income. [IRC §199(f)(2)]
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