?ÿ
"Exception to the Denial of Deductions for Specified Service Businesses Based on Taxable Income
Similarly, the prohibition on claiming the Section 199A deduction against income earned in a specified service business does not apply if the taxpayer claiming the deduction has taxable income of less than $315,000 (if married filing jointly; $157,500 for all other taxpayers).?ÿBecause the two W-2-based limitations also do not apply when taxable income is below those same thresholds, a taxpayer in a specified service business with taxable income below the thresholds simply deducts 20% of any qualified business income (subject to the overall limitation).
Ex. A, a single taxpayer, is an attorney who operates his business as a partnership. The partnership pays no W-2 wages during the year. During 2018, A earns $100,000 from his law business and has total taxable income of $150,000. While A would normally be barred from claiming a deduction under Section 199A by virtue of being engaged in a specified service business, because A??s taxable income is less than $157,500, the prohibition on specified service businesses does not apply. In addition, because taxable income is less than $157,500, the W-2 limitations do not apply. As a result, A??s final deduction is $20,000 (20% of $100,000)."
I guess I'm good ;-(
A's final decision will be what I can enter into TurboTax............lol
The IRS released rules today that strengthen the interpretation that surveyors will be allowed to take the deduction.?ÿ There are two key points:
1.?ÿ The legislation specifically disallows the deduction for "any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners."?ÿ It's conceivable that a land surveyor could be categorized as such.
2.?ÿ The legislation specifically names engineers and architects as allowed, but surveyors aren't mentioned, which meant that surveyors might be lumped into the category of consulting, which is specifically disallowed.
However, today's 247-page ruling notice includes the following that addresses item 1:
If Congressional intent was to exclude all service businesses, Congress clearly could have drafted such a rule. Accordingly, the final regulations retain the proposed rule limiting the meaning of the reputation or skill clause to fact patterns in which an individual or RPE is engaged in the trade or business of receiving income from endorsements, the licensing of an individual??s likeness or features, and appearance fees.
It also addresses item 2:
The performance of services in the field of consulting does not include the performance of services other than advice and counsel
I think we're good.
Jim,
I am having a hard time understanding what you wrote above as what you quoted seems to go against what you are saying. My layman's reading of the initial wording that came out last summer appeared favorable to surveying. But the final IRS guidance published 1/18/2019 on the Sec. 199A issue say they specifically exclude Engineering and Architecture firms from the definition of "Consulting Businesses".
Any new thoughts?
thanks, Jim