The New IRC 199A Pass-Thru Business Deduction: Applying the 28.57% Magical W-2 Formula

By Steven J. Oshins, Esq., AEP (Distinguished) The greatest opportunity business owners received from the Trump Tax Act is the new IRC 199A pass-thru business deduction. This deduction allows certain taxpayers to deduct 20% of their Qualified Business Income. However, not every taxpayer can receive this deduction, so estate planners have a huge opportunity to exploit the new statute by educating themselves with the details of the new statute. For a married couple with taxable income of no more than $315,000 (adjusted for inflation) and for an unmarried individual with taxable income of no more than $157,500 (adjusted for inflation),…

The SECURE Act: Everything You Need to Know (and How to Advise Your Clients!)

On December 20, 2019, President Trump signed a spending bill which had attached to it a piece of legislation that much of the estate, tax and financial world has been anxiously awaiting for an update on called the “Setting Every Community Up for Retirement Enhancement Act of 2019” (or “SECURE Act”). The SECURE Act went into effect January 1st, 2020 and is set to dramatically impact retirement planning for you and your clients! As many are aware, the most important provision of the SECURE Act to impact our clients and the planning we do for them includes the elimination of…

The Kaestner Case and the New Emphasis on Using Non-Grantor Trusts to Save State Income Tax

By Steven J. Oshins, Esq., AEP (Distinguished) Estate planners are constantly looking for additional ways to save taxes for their clients.  One often-overlooked concept is to use trusts to save state income taxes, especially for those clients who reside in a state with a high state income tax.  Ironically, income tax savings is generally the most appreciated work we do for our clients given that they can personally enjoy the savings, but yet the planning opportunities are frequently missed. Different states have different rules as to what creates a “resident trust” that is subject to taxation in that state.  States…

CHECKLIST: 2017 Tax Act & Recent Developments

By Martin M. Shenkman, CPA, MBA, PFS, AEP (Distinguished), J.D. Summary: The 2017 Tax Cut and Jobs Act has changed almost every aspect of planning.  Consider the following. √ Sec. 199A: The 20% QBI deduction applies for 2018 – 2025. Consider the sunset of this tax bennie when evaluating the cost of planning to enhance whatever benefits you can get. Example: Before restructuring a business, will the payback over the years remaining be worth the cost? √ Charity: The new doubled standard deduction may eliminate any tax benefit from donations. Consider setting up a non-grantor trust to salvage that deduction. Example: You create an irrevocable…

Section 199A: Triple Net Leases Considered a Trade or Business?

By Alan S. Gassman J.D., LL.M. (Taxation), Florida State Bar Certified Specialist in Wills, Trusts & Estates, AEP (Distinguished) and Kelsey Weiss Introduction The 2017 Tax Cuts and Jobs Act introduced the new, and sometimes problematic, Section 199A to the Internal Revenue Code. Section 199A was designed to provide taxpayers with a 20% deduction for qualified business income earned through qualifying trades or business. This deduction for business owners was added, most likely, in response to the significant tax cut the Act created for large corporations.1 Unfortunately, there is no single accepted definition of “trade or business,” so many taxpayers are in…

199A – The Real Regulatory Story: Revelations From The Proposed Regulations

By Alan S. Gassman J.D., LL.M. (Taxation), Florida State Bar Certified Specialist in Wills, Trusts & Estates, AEP (Distinguished) As most estate planners know, the new Section 199A proposed regulations were released earlier in August to great fanfare and curiosity.  My team and I have spent considerable time, already, poring through the language and changes. We were given the opportunity to share our thoughts and summary of these regulations in an article featured on Forbes.com.  To read this article, click here. SECTION 199A RESOURCES Here are some other Section 199A resources that may be of interest to you: PROGRAM REPLAY: “Section 199A…

IRS Notice 2018-54 Warns Taxpayers to Avoid State Work-Arounds $10,000 SALT Deduction Cap

By Steven J. Oshins, Esq., AEP (Distinguished) The $10,000 SALT Deduction Section 11042 of The Tax and Jobs Act limits an individual’s State and Local Tax Deduction (“SALT” deduction) to $10,000 per calendar year. Adoption of State Proposals to Work Around the SALT Deduction Limitations In response to this new limitation, some state legislatures are considering or have adopted legislative proposals that would allow taxpayers to make transfers to funds controlled by state or local governments, or other transferees specified by the state, in exchange for credits against the state or local taxes that the taxpayer is required to pay. …

Exploiting the New IRC 199A Pass-Thru Business Deduction Using Multiple Taxpayers

By Steven J. Oshins, Esq., AEP (Distinguished) The 2017 Tax Act was rushed in order to make it effective as of January 1, 2018.  Anything that is rushed certainly will create opportunities for creative estate planners who will exploit the new tax laws for the benefit of their clients.  The greatest opportunity business owners received from the Trump Tax Act is the new IRC 199A pass-thru business deduction.  This deduction allows certain taxpayers to deduct 20% of their Qualified Business Income. The Taxable Income Limitations For a married couple with taxable income of no more than $315,000 and for an…

ABA Heckerling Reports from the 2018 Heckerling Institute

For the past 19 years, the American Bar Association Section of Real Property, Trust and Estate Law with the permission of the University of Miami School of Law, releases several extensive reports highlighting the various lectures and proceedings of the Heckerling Institute, one of the nation’s largest estate planning conferences, held every year in January. This past January 2018, marked the 52nd Annual Heckerling Institute.  To view, download and access these extensive reports, please click here to visit the ABA’s website. Further, at the above website, you can also access reports from prior Heckerling Institutes as well. We, at The…