The Treasury Department and Internal Revenue Service (IRS) proposed regulations on Wednesday that would allow many owners of sole proprietorships, partnerships, trusts and S corporations to deduct 20 percent of their qualified business income.
The deduction is part of the big tax-reform package passed earlier this year, but many of the regulations implementing the general changes had to be worked out. The just-released proposed regulations are the result.
According to the National Association of Realtors® (NAR), the “deduction will have a significant, beneficial impact” on Realtors. While the law and changes are extremely complex, NAR believes it will apply to “a wide range of real estate professionals, including those who are self-employed, as well as those operating through partnerships, LLCs and S corporations.”
NAR says it’s still reviewing the proposed rule, however.
It appears for now that some professions are winners while others are losers. Architects and engineers appear to be eligible for the proposed tax deduction, for example; accountants, doctors and lawyers do not – but there are many exceptions to the rule.
The new qualified business income deduction is available for tax years beginning after Dec. 31, 2017. Taxpayers can claim it for the first time on the 2018 federal income tax return they file next year.
Some of the documents are now posted online:
NAR tax reform summary and resources
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