The Tax Cuts and Jobs Act introduced the 199A deduction in 2018. Taxpayers earning domestic income from a trade or business operating as sole proprietorships, partnerships, S corporations, or LLCs may be eligible for this deduction. This 20% deduction against qualified business income will be effective until the end of 2025 unless extended by Congress. While it is attractive, 199A has complex requirements. Here’s an overview of this new tax provision and how it may benefit you.
You've got shares of an individual stock worth a hefty chunk of change, held in a standard taxable account that's gone up in value -- maybe an inheritance, maybe a gift, maybe employer stock. Huzzah! But if you sell, you'll have to pay taxes on the sale. Booooooo. And while "a tax deferred is a tax avoided", you'd kind of like to actually spend your wealth. So: what do you do?
We’re getting down to ‘crunch time’… just a few weeks to go before April 15 (or for those of us in the states that recognize Patriots’ Day as a holiday, April 16.) It’s around this time that advisors across America start to get a steady stream of calls that go a bit like this:
“Hi- it’s Claire (or Claire’s accountant). There’s a stock being reported on our tax form as sold, but they’re calling it a ‘Non-Covered holding’ and showing it as a ‘zero’ cost basis. It’s resulting in my owing a bunch of taxes. How can we fix that?”
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