On August 8, the IRS and U.S. Treasury proposed tax regulations for a new 20 percent income tax deduction for owners of businesses organized as pass-through entities, which included rules preventing the measure from being used as a tax loophole for wealthy individuals. However, one narrowly defined restriction on who qualifies could allow some high-income service professionals to benefit unfairly while barring others.
Gunster tax law attorney Daniel Glassman was tapped by Law360 to weigh in on the proposed regulations. Glassman stated that the proposal would limit the government’s ability to prevent certain high-income service providers from classifying themselves as independent contractors and recharacterizing their wages as pass-through income. “It limits it to the specifically listed service businesses. So if you provide services in a context other than the specifically listed businesses, then potentially, you have a lot more flexibility to restructure and qualify for this deduction,” he said.
Glassman advises clients in all areas of personal and business tax planning including federal income tax, corporate tax, partnership tax, federal wealth transfer (estate, gift, and generation skipping transfer tax), and state of Florida tax issues.
Read the full article: Pass-through rules may treat service providers unequally