Section 199A Deduction Resource Guide

As the questions pour in regarding the Section 199A deduction, Paul Neiffer does his best to answer them one article or blog post at a time. Here's a list of articles to help clear the confusion about tax reform and Section 199A deduction.

Why Did They Call It 199A?

"If a farmer operates as a 'C' Corporation and is a member of a farm cooperative to which the corporation sells grain, are the cooperative sales proceeds eligible for the 20 percent sec 199A deduction? Corporations were eligible for the Sec 199 deduction so why not the Sec 199A deduction?"

We continue to get comments or questions just like this and I thought it would be good to give a little more detail on this deduction since there appears to be a lot confusion between Section 199 and 199A.

Read more.

 

The New Section 199A Deduction

The provision in the new tax bill that likely will provide the greatest benefit to farmers—but also create the greatest amount of angst in our industry—is the new Section 199A deduction.

My analysis is based solely on a reading of the new tax code and the conference committee explanation of the tax law. Once we receive regulations from the IRS, this analysis could change, and it could be material.

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Section 199A "Fix" - Winners and Losers

The "fix" for the "grain glitch" that we have previously posted on several times is now part of the budget bill that should be passed by the end of this week. Since we are now fairly certain as to what the final 199A law will be, I thought it would be good to go over the winners and losers of 199A (in its final form).

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Additional Section 199A Guidance

We continue to get reader's questions on Section 199A and here are some additional questions and answers.

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Paul Neiffer: Musings on Tax Reform

It was a long, slow haul to get tax reform approved, but late in 2017 the Tax Cuts and Jobs Act was officially signed by President Donald Trump and is now the law. However, the intent of Section 199A to provide a tax cut for individuals, as compared to corporations, was flawed and Congress finally “fixed” it in late March. Here are some thoughts on the major items applicable for farmers and their families regarding income and estate tax planning.

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After the Grain Glitch Fix - What Now?

The new tax law brought into play Section 199A (commonly known as the 20% pass-through deduction). Here’s a quick refresher.

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When is Better Not to Aggregate?

In yesterday's post I indicated that you typically would want to always aggregate and I asked for readers to let me know when you would not want to aggregate. Someone did send in an example when it is better to not aggregate, however, it is very limited and likely not applicable in farming, but I will share it.

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What's My Coop Deduction?

We continue to get questions regarding how to handle sales to a cooperative and the 20% Section 199A deduction. In theory, the total deduction is rather easy. You take your regular Section 199A deduction and then have a Plus and a Minus. However, the execution of the theory can get a little complex. When the proposed regulations were issued, the IRS stated that the regulations on the cooperative part of the deduction would come later in the year (likely December 29, 2018 if I had a guess). However, the Code is fairly specific in how to calculate the deduction.

Read more.