Christian Posted December 9, 2018 Report Share Posted December 9, 2018 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 ? Quote Link to comment Share on other sites More sharing options...
Catherine Posted December 9, 2018 Report Share Posted December 9, 2018 First question is WHY is he getting a W2 from a partnership he owns? He should be getting "guaranteed payments" on a K-1, subject to SE tax. At first glance there are more problems than merely "does this get the reduction" going on. 4 Quote Link to comment Share on other sites More sharing options...
Christian Posted December 9, 2018 Author Report Share Posted December 9, 2018 Oops. It looks as if I have made an error and confused clients. Have patience you too will get older. 1 1 Quote Link to comment Share on other sites More sharing options...
Lee B Posted December 9, 2018 Report Share Posted December 9, 2018 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. 3 Quote Link to comment Share on other sites More sharing options...
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