The Basics of Claiming a Section 199A Deduction and a Potential Alternative
By Anthony Diosdi The Tax Cuts and Jobs Act of 2017 implemented various changes to the Internal Revenue Code that impacted business. A notable change is that the act provides that all C corporations are taxed at a flat 21 percent of taxable income. Prior to the enactment of the Tax Cuts and Jobs Act, C corporations were tax at a rate as high as 35 percent. In order to lower the federal tax rates of business owners that are not C corporations, the Tax Cuts and Jobs Act enacted Section 199A of the Internal Revenue Code. Section 199A was designed to provide non C corporate business owners with a 20 percent deduction from qualified business income. The 20 percent deduction is effective for taxable years beginning after December 31,…