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■ Business Trends: FINANCE


Section 199A and the 2018 tax return


Proposed rules from the IRS help clarify deduction for pass-through businesses


by Tim Loughran M


any Virginia business owners signed off on last year’s tax returns only a few weeks ago,


in early September, the Internal Revenue Service’s annual, last-chance filing dead- line for most U.S. companies. Now, accountants and tax advisers


want them to focus on the best ways to benefit from the 2017 Tax Cuts and Jobs Act (TCJA), the biggest overhaul of the U.S. tax code since the 1980s. The law’s many changes — espe-


cially for pass-through companies like sole proprietors, partnerships, LLCs and S-Corps — means meetings with tax professionals are “not just a five-minute conversation,” like they may have been in other years, says Jeff Barbour, a partner with the accounting firm Brown Edwards in Roanoke. “You should really take advantage


of the opportunity to run the calcula- tions through multiple scenarios with whatever updated software programs you have at your disposal” before preparing a tax return in 2019, he says. Tax specialists all say the extra time


and effort could mean huge financial ben- efits to thousands of smaller businesses across the commonwealth, since the TCJA now permits them a 20 percent deduction on their year-end taxable income. “Especially in this last quarter it’s


really important for companies to know Photo by Don Petersen


Jeff Barbour, a partner with Brown Edwards in Roanoke, urges clients “to run the calculations through multiple scenarios” with updated software programs before preparing tax returns.


where they are with their business,” says Christina Monfalcone, president of Monfalcone & Garris in Charlottesville. “The biggest problem with small


businesses, not just sole proprietors but even businesses with multiple owners, … is they don’t keep their records well enough to know where they are to begin with. So, how will they know how they can take advantage of these options, to take advantage of the 20 percent deduc- tion if they don’t know where they are?” cautions Monfalcone. The Republican-controlled


www.VirginiaBusiness.com


Congress swiftly passed TCJA last December. President Donald Trump then promptly signed the bill into law a few days before Christmas to fulfill one of the main promises of his 2016 presi- dential campaign. The legislation lowers certain tax rates and raises deductions for individuals, families and companies.


Clearing up the details Most of the analysis and publicity


surrounding the TCJA has focused on a new tax rate for corporations, (slashed from 35 percent to 21 percent) and an


VIRGINIA BUSINESS 61


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