Qualified Business Income Deduction: What it Means for Flow-Through Entities
There is certainly a lot of hype surrounding the new C Corp 21% flat tax. It’s powerful, easy to understand, and will no doubt promote growth in C Corps of all sizes. What’s also getting a lot of attention, but is much more difficult to understand, is the new qualified business income deduction available to those with income from flow-through entities.
Under the new law, effective January 1, 2018, owners of certain entities are entitled to take a deduction equal to 20% of the “qualified business income” earned from the business. Eligible entities include:
– Sole proprietorships reported directly on Schedule C – Rental activity reported directly on Schedule E – S Corporations – Partnerships