- Consider electing out of bonus depreciation and not electing IRC §179 to increase income for purposes of IRC 199A.
- Consider increasing retirement contributions to lower taxable income below the IRC 199A phaseout threshold.
- Consider using family partnerships and trusts to spread the Qualified Business Income between family members.
- Encourage clients to transfer IRA amounts to a charity rather than report the income as part of AGI and take a charitable deduction on Schedule A — especially if they are taking the standard deduction.
- Bunching deductions may mean more now with the increased standard deduction. Medical expenses, charitable contributions, and property taxes are particularly good candidates here.
- Don’t forget that interest tracing will create deductible interest if a home mortgage is taken out and the funds used for a business or investment property. Don’t forget the 10T election.
- Avoid making guaranteed payments to partners if the payments are equal. These payments reduce Qualified Business Income for purposes of the IRC §199A deduction.
More tips to come! Get detailed tax planning information and a full TCJA update at the 2018/19 Federal and California Tax Update Seminar. Locations are selling out fast! Click here to check dates.