November-December 2018 | Journal of Passthrough Entities

Real Estate & Passthrough Planning Corner: Guaranteed Payments Under Code Sec. 199A

Norman Lencz, Chris Davidson, and Venable alum Brian Masterson published "Real Estate & Passthrough Planning Corner: Guaranteed Payments Under Code Sec. 199A" in the November-December 2018 issue of the Journal of Passthrough EntitiesClick here to read the article. An excerpt is below.

"While the reduction of the corporate income tax rate from 35% to 21% was arguably the centerpiece of last year’s tax reform legislation, the new 20% passthrough deduction (the 'QBI Deduction') for 'qualified business income' ('QBI') set forth in Code Sec. 199A seems to have garnered the most attention among both tax professionals and the general media. While not as dramatic as the corporate tax rate cut, Code Sec. 199A has the potential to effectively reduce the highest marginal tax rate with respect to QBI from 37% to 29.6%. Given the complexity of the QBI Deduction and the speed with which it was cobbled together by Congress, there are many ambiguities in this statutory provision, and while some questions about the provision were answered by Proposed Regulations issued by the Treasury Department on August 8, 2018 (REG-107892-18) (the 'Proposed Regulations'), many open issues remain."