section 199a provides owners of pass-thru entities with a deduction equal, potentially, to 20% of their business income.
the 20-page law and nearly 200 pages of regulations, however, present small businesses and individual investors with tricky rules and, for high-income taxpayers, with very complicated accounting.
hence, this monograph for tax accountants. it covers in detail how the new deduction works–including discussion of the technical corrections made in the spring of 2018 and proposed regulations and revenue procedures published in august 2018. and it discusses what taxpayers and their accountants need to do—in some cases immediately—to maximize the tax savings available.
already, thousands of cpa firms have used this resource to learn the law and begin helping their business clients.
plus: free updates for the 2019 tax season
the “maximizing section 199a deductions” monograph includes free updates through january 31, 2019, for any additional notices or proposed regulations. (if you’re a tax practitioner, you’re going to need to keep up to date on this.)
note: the original monograph was updated three times: first, for the conference report that came out early in 2018, then the technical corrections act that congress passed in the spring, and finally the proposed regulations and proposed revenue procedure that the internal revenue service published in early august. this new edition runs 135 pages and 36,000 words. the previous version ran 96 pages and 25,000 words.
money back guarantee
we’re, of course, providing a money-back guarantee… if you don’t find our monograph saves you several hours of time and lets you more quickly start helping clients with this wonderful new tax shelter, just email and ask for a refund.
detailed information about section 199a monograph
the monograph provides tax accountants and other tax professionals with all the information they need (dozens of simple examples) to start work on maximizing this tax planning opportunity, including the following chapters:
chapter 1 – the section 199a deduction in a nutshell: a practitioner’s overview of the deduction to understand the big picture and begin thinking in broad brush strokes about how the deduction works for small businesses, real estate investors, and investors in reits and qualified publicly traded partnerships.
chapter 2 – what counts as qualified business income: detailed discussions of exactly what types of business income taxpayers can shelter with the section 199a deduction, with specific discussions of the rules that apply to different types of business owners and investors: sole proprietorships, partnerships, s corporations, trusts and estates, and then investors in reits and qualified publicly traded partnership. also, coverage of how qualified business income accounting works for section 1031 exchanges, section 1031 involuntary transfers and for section 351 incorporations and section 721 partnership formations.
chapter 3 – specified service trade or business disqualification: in-depth coverage of which types of businesses lose some or all of the section 199a deduction as a result of falling into a specified service trade or business like health services, law, consulting, accounting, actuarial science, performing arts, athletics, investment services, brokerage and trading services, and situations where the business relies on the skill or reputation of a single celebrity.
chapter 4 – accounting for w-2 wages and depreciable property: every pass-through entity (so every partnership and s corporation) needs to provide detailed accounting for a business’s wages and depreciable property because some taxpayers need this information in order to calculate their section 199a deduction. chapter 4 walks the reader through this burdensome area of the new law.
chapter 5 – multiple trades or businesses: chapter 5 describes the additional accounting and reporting required for situations where an individual owns interests in multiple trades or businesses. chapter 5 also describes the rules for making an aggregation election–and when the aggregation election makes sense.
chapter 6 – fourteen section 199a deduction tax planning tips: more than a dozen practical, common-sense tactics tax accountants and advisers can discuss with their clients to start saving thousands in taxes.
chapter 7 – un-incorporation and s status revocation: detailed analysis of when an s corporation should liquidate or revoke its s corporation status in order to maximize tax savings.
chapter 8 – section 199a tax return preparation checklist: just what it says: a checklist of steps taxpayers will want to take on any extended 2017 returns in order to maximize the deduction in 2018.
chapter 9 – specified agricultural and horticultural cooperatives and their patrons: detailed discussion and examples of the rather complicated rules (including the “grain glitch” fix) for specified agricultural and horticultural cooperatives and their members
the monograph also includes two appendices
the first provides faqs tax professionals can share with their clients (via email or traditional letters) to help clients understand the section 199a opportunity.
the author: stephen l. nelson, cpa, mba, ms (tax)
the second provides the text of the section 199a law including the technical corrections.
cpa stephen l. nelson is the managing member of seattle-area cpa firm that specializes in serving privately held companies with multi-state and international operations as well as their owners. a cpa for three-plus decades, nelson holds an mba in finance from the university of washington and an ms in tax from golden gate university. a former adjunct tax professor at golden gate university, he is also the author of numerous reference books including the bestselling quickbooks for dummies and quicken for dummies titles.
in about 100 pages of plain language, it provides rich, detailed information, and a straightforward methodology for setting shareholder-employee salaries.
packed full of clear explanations with dozens of real-life examples, the setting low s corporation salaries monograph breaks down its subject matter into ten, easy to digest chapters:
chapter 1 – how s corporations save payroll taxes. a quick review of how the savings work including a subtlety most s corporation owners don’t know.
chapter 2 – reviewing the law. an explanation of the actual statute, regulation and revenue rulings that provide the loophole.
chapter 3 – common subchapter s salary practices.irs data about what s corporations actually pay their shareholder-employees.
chapter 4 – single shareholder situations. when and how a small sole proprietor can maybe make the s corporation gambit work.
chapter 5 – the sec. 199a deduction complication. a discussion of how the sec. 199a deduction works for an s corporation and how to resolve conflicts between the two tax laws.
chapter 6 – avoiding unreasonable distributions. a sidebar about the importance of also thinking about shareholder distributions.
chapter 7 – developing reasonable compensation amounts. an eight-step work plan for setting reasonable compensation amounts for shareholder-employees.
chapter 8 – practitioner case studies.practical real-life examples showing how to optimize shareholder-employee salaries in common situations.
chapter 9 – risky practices and danger zones. discussions of common, dangerous s corporation shareholder-employee compensation mistakes.
chapter 10 – winning the “reasonable compensation” argument. a step-by-step plan for winning an irs audit of s corporation compensation.
appendix a – revenue ruling 59-221. the key primary source that opened the loophole.
appendix b – revenue ruling 74-44.the revenue ruling that the irs uses to blow up bad s corporation salaries.
appendix c – relevant portions of h.r. 4213. the law that almost passed and which applies to single-shareholder, single-employee s corporations.
appendix d – example client letter. boilerplate letter accountants and attorneys can use for their own client mailings.
appendix e – example client email. a boilerplate email.
plus: free updates!
the setting low salaries for s corporations monograph includes two updates: one update for sec. 199a proposed regulations the irs provided before january 31, 2019, and one update for whenever the irs next updates its s corporation salaries data.
including full table of contents and introduction (pdf, 13 pages)