The Internal Revenue Service has provided the long-anticipated final word on how business owners can claim one of the biggest perks in the 2017 Republican tax overhaul, The Los Angeles Times reports.
The regulations detailing the new 20% deduction for pass-through business owners are crucial to the operators of such entities, ranging from mom-and-pop convenience store owners to private equity investors.
The guidance, issued Friday despite an ongoing partial government shutdown, can cut those business owners’ tax bills by as much as one-fifth.
The IRS made a series of changes to make it simpler for businesses to determine whether they can get the tax break, a senior Treasury official said on a call with reporters.
Veterinarians, for example, don’t qualify for the deduction, but rental real estate owners who spend at least 250 hours a year involved with the business can get the deduction, according to the IRS guidance. The rules also make clear that income from originating and selling mortgages is eligible for the deduction, said Alan Keller, first vice president of legislative policy at Independent Community Bankers of America, a trade and lobbying group. Read the full story.