Tax Credit

11.15.18

By Toby Kaye, CPA/ABV

The top questions I hear from prospective business owner clients are:

“Is your firm proactive in tax planning?”

“Will you be thinking about me and how to capitalize on tax planning opportunities for my business?”

Apple Growth Partners promotes a culture of continuously reviewing how to improve our client’s tax results, whether they have been a client for decades or just switched to us. Your business deserves an accounting partner that is creative and capitalizes on new tax opportunities applicable to your situation.

The Section 199A business deduction is a prime example of this type of opportunity. The deduction has considerable potential tax benefit (up to 20% of income) for many privately-owned businesses in Northeast Ohio. However, the tax law is broad and complex. Furthermore, there are significant first year choices in 2018 that will impact the business owner’s ability to fully benefit from the deduction in future years. The risk of missed deductions increases if you operate multiple businesses, either through one legal entity or multiple legal entities.

The rules for this deduction are new this year due to the tax reform changes.  Does your current accountant pass this proactive test?

Here are some topics related to the deduction that your proactive accountant should be discussing with you before year end 2018:

  • Determine which of your businesses are eligible for the deduction. Propose solutions to increase qualified business income from these eligible entities compared to the ineligible entities.
  • Discussed the special aggregation election rules under the tax provision. Analyze which combination of your entities would be most beneficial.
  • Refer to the required information disclosures on your business K-1s necessary for the owners to be eligible for the deduction. Review whether the information is currently available in your accounting system to complete these disclosures.
  • Complete a projection of your current 199A deduction and provide tax planning actions that can be achieved prior to year end to optimize your tax deduction.

Perhaps your accountant has indicated that you will not be eligible for the deduction or your deduction will be limited due to the type of business you own or your personal tax situation. Let us review whether any tax planning steps can be taken to improve your deduction.

Contact me today to discuss tax planning ideas for the Section 199A business deduction specific to your tax situation.