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By now you have all heard of this new 20% deduction for business income for non C-Corporation businesses. I refer to it this way instead of the 20% deduction for flow-thru business income because I want to make sure you all understand, this deduction is also available for those of you who are sole proprietors and individual owners of rental real estate, and not just for partnership and S-Corp income. You also receive this possible deduction if you receive income from a REIT, publicly traded partnership or qualified cooperatives.
With the year just starting, I wanted to give some practical applications, suggestions and questions you should be asking yourself or your employer, or changes you should make to internal processes because of changes in the Tax Cuts and Jobs Act.
Miscellaneous Itemized Deductions The miscellaneous itemized deductions many of you take on your individual returns are now no longer available. Things like unreimbursed business expenses, home office use if you are an employee, and tax return preparation fees are examples.
Lawmakers finally did it. First, they reduced the directly related and associated entertainment deductions to 80 percent with the 1986 Tax Reform Act. In 1993, they reduced that 80 percent to 50 percent.
And now, with the newest tax reform, lawmakers simply killed business deductions for directly related and associated entertainment effective January 1, 2018.