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Twenty Percent Reduction For Business Owners


Christian

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In trying to understand these new rules I have this situation. A client and his business partner own an LLC. The client receives a W-2 each year from the partnership. As I read the rules his W-2 income is not subject to the twenty percent reduction. Am I correct on this ? The twenty percent taken at the corporate level ?

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2 hours ago, Christian said:

In trying to understand these new rules I have this situation. A client and his business partner own an LLC. The client receives a W-2 each year from the partnership. As I read the rules his W-2 income is not subject to the twenty percent reduction. Am I correct on this ? The twenty percent taken at the corporate level ?

First the the 20 % PTE deduction is taken on Form 1040 on the lower of QBI or Form 1040 Taxable  Income.

Therefore you could have positive QBI and zero taxable income resulting in a zero PTE Deduction.

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