Much have been said as the to the added benefits offered by the Pass-through provisions under the recent Tax Cuts & Jobs Act of 2017. Very good stuff indeed for small businesses. However don not forget that included in these provisions are non-corporate sole proprietors filing Form 1040 Schedule C’s, and lessors filing Form 1040 Sch. E. In sheer number of Sch. C and Sch. E lessor filers rank close to the number of S Corporation filers.
I have summarized below the entities, and nonentities i.e sole proprietors that are covered by the new Pass-Thru provisions.
Pass-through entities and structures include-
· S corporations
· Multi-member LLCs
· Single-member LLCs i.e. disregarded entities
· Sole proprietors filing Form 1040 Sch. C
· Real estate investors and lessors filing Form 1040 Sch. E
· Trusts and estates, REITs and qualified cooperatives.
Note entities, and sole proprietors, above acting in these service industries have slight limitations. These businesses are referred to as Specified Service Trade or Business and are defined as :
“any trade or business where the principal asset is the reputation or skill” such as doctors, attorneys, accountants, actuaries, financial advisors, entertainers and most consultants
These industries share the same benefits but are limited to those pass-through service providers whose family taxable ncome is below $157,500 (singles), and $315,000 (married)