The new law provides a deduction for individual taxpayers who receive income from pass-through entities (e.g. S corporations and partnerships) roughly equal to 20% of each owner’s share of such income, subject to various limitations and exclusions.
The new deduction will be a boon for recipients of this income, but may generate litigation with the IRS over the calculation of the deduction. And there is a new 20% accuracy penalty if the understatement is greater than 5% of the tax required to be reported.
The foregoing is not intended as specific legal or tax advice. Contact your AEGIS attorney or other tax advisor before taking any action.
Norman handles probate matters ranging from ordinary estate administration to trust litigation. He has represented individuals and businesses before the Internal Revenue Service and the tax departments of various states. As part of a bar subcommittee, Norman drafted key provisions of the Missouri Uniform Powers of Appointment Act recently passed by the Missouri General Assembly and signed into law by the governor.