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163(j) Small Business Exception: Navigating the Challenges and Opportunities
Author: Dr. Evelyn Reed, CPA, MBA, MST – Dr. Reed is a Professor of Accounting at the University of California, Berkeley, specializing in tax law and small business finance. She has over 20 years of experience advising small businesses on tax strategies and has published extensively on the subject.
Keywords: 163(j) small business exception, small business tax deductions, interest expense deduction, Section 163(j), tax optimization, small business tax planning, qualified business income (QBI) deduction.
Summary: This article provides a comprehensive analysis of the 163(j) small business exception, exploring its complexities, benefits, and potential pitfalls. It examines the eligibility requirements, calculation methods, and strategic implications for small businesses seeking to maximize their tax deductions. The article also discusses challenges businesses may face in complying with the regulations and offers practical advice for navigating the complexities of the 163(j) rules.
Publisher: The Journal of Small Business and Entrepreneurship – This peer-reviewed journal is published by the prestigious American Academy of Small Business (AASB), a leading organization dedicated to advancing the understanding and support of small businesses. The journal is renowned for its rigorous editorial process and its commitment to publishing high-quality research and insightful commentary on relevant topics.
Editor: Professor Michael Davis, PhD – Professor Davis is the Editor-in-Chief of the Journal of Small Business and Entrepreneurship and a leading expert in small business taxation and financial management. He brings extensive experience in reviewing and editing academic research to ensure the accuracy and clarity of the content.
Introduction: Understanding the 163(j) Small Business Exception
The 2017 Tax Cuts and Jobs Act (TCJA) introduced significant changes to the deductibility of business interest expense, primarily through Section 163(j). This section generally limits the deduction of business interest expense to 30% of adjusted taxable income (ATI). However, a crucial exception exists for small businesses, offering relief from this stringent limitation. This article delves into the nuances of the 163(j) small business exception, highlighting its implications for small business owners.
Eligibility for the 163(j) Small Business Exception
The 163(j) small business exception applies to businesses meeting specific criteria. Crucially, the exception is tied to the average annual gross receipts over the three prior tax years. Businesses with average annual gross receipts of $26 million or less for the three prior tax years generally qualify for the exception. This threshold is adjusted annually for inflation. It's important to note that this is not a blanket exception; certain types of businesses, like those in the real estate industry, might face additional restrictions.
Calculating the Deduction under the 163(j) Small Business Exception
For businesses qualifying under the 163(j) small business exception, the calculation of the deductible interest expense differs significantly from the general limitation. Instead of the 30% ATI limitation, eligible businesses can generally deduct the full amount of their business interest expense. This significantly reduces the tax burden for many small businesses. However, careful tracking and documentation are crucial to support the claimed deduction during an audit.
Challenges in Applying the 163(j) Small Business Exception
Despite its benefits, the 163(j) small business exception presents several challenges:
Determining Average Annual Gross Receipts: Accurately calculating the average annual gross receipts over the three prior tax years can be complex, particularly for businesses with fluctuating revenues or those undergoing significant restructuring. Inaccuracies can lead to disqualification from the exception.
Maintaining Accurate Records: Meticulous record-keeping is essential to demonstrate eligibility and substantiate the claimed interest deduction. The IRS scrutinizes these deductions closely, and insufficient documentation can result in penalties and adjustments.
Understanding the Interaction with Other Tax Provisions: The 163(j) small business exception interacts with other tax provisions, including the qualified business income (QBI) deduction. Understanding these interactions is crucial for optimizing tax planning. Incorrect application can lead to unintended tax consequences.
Staying Updated on Regulatory Changes: Tax laws are subject to change, and staying informed about potential modifications to the 163(j) small business exception is crucial for compliance. Ignoring updates can lead to costly errors.
Opportunities Presented by the 163(j) Small Business Exception
The 163(j) small business exception offers significant opportunities for tax optimization:
Increased Cash Flow: By allowing the deduction of full interest expense, the exception frees up valuable cash flow that can be reinvested in the business for growth and expansion.
Improved Profitability: Reduced tax liabilities translate directly to improved profitability metrics, making the business more attractive to investors and lenders.
Strategic Planning: Understanding and leveraging the exception enables proactive tax planning, allowing businesses to optimize their financial structure and minimize their overall tax burden.
Enhanced Competitiveness: Businesses effectively utilizing the exception gain a competitive edge, allowing them to allocate more resources to core business activities.
Navigating the Complexities of the 163(j) Small Business Exception
Successfully navigating the 163(j) small business exception requires careful planning and professional guidance. Small business owners should consult with experienced tax advisors who can help them:
Determine eligibility: Assess whether their business meets all the requirements for the exception.
Calculate the deduction accurately: Ensure correct application of the rules and regulations.
Optimize tax strategies: Develop a comprehensive tax plan that maximizes the benefits of the exception.
Maintain comprehensive records: Keep detailed and accurate records to support the deduction during an audit.
Stay updated on regulatory changes: Remain informed about any changes that may impact their eligibility.
Conclusion
The 163(j) small business exception is a powerful tool for reducing the tax burden of eligible small businesses. However, its complexity necessitates careful planning and expert guidance. By understanding the eligibility requirements, calculation methods, and potential challenges, small businesses can leverage this exception to enhance their financial health and competitiveness. Proactive tax planning and ongoing consultation with qualified professionals are crucial for maximizing the benefits of this important provision.
FAQs
1. What is the threshold for average annual gross receipts to qualify for the 163(j) small business exception? The threshold is generally $26 million or less, averaged over the three prior tax years, but this amount is subject to annual inflation adjustments.
2. Does the 163(j) small business exception apply to all types of businesses? No, certain types of businesses, such as those in the real estate industry, may face additional restrictions.
3. What happens if a business exceeds the gross receipts threshold in a given year? Exceeding the threshold in a single year doesn't automatically disqualify the business, but it will impact the calculation of the average annual gross receipts over the three prior tax years.
4. What type of records are necessary to support the 163(j) small business exception claim? Businesses need to maintain detailed records of gross receipts, interest expense, and other relevant financial data.
5. How does the 163(j) small business exception interact with the QBI deduction? The interaction can be complex and requires careful analysis by a tax professional to optimize the overall tax benefit.
6. Can a business retroactively claim the 163(j) small business exception? No, it's a current year deduction based on the previous three years' average gross receipts.
7. What are the penalties for incorrectly claiming the 163(j) small business exception? Penalties can include additional taxes, interest, and potential audit scrutiny.
8. Should I consult a tax professional to utilize the 163(j) small business exception? Yes, it's highly recommended to consult a tax professional due to the complexity of the regulations.
9. Where can I find the latest updates on the 163(j) small business exception? Consult the IRS website and reputable tax publications for the most current information.
Related Articles:
1. "Understanding the 30% Interest Expense Limitation under Section 163(j)": A detailed explanation of the general limitation and its exceptions.
2. "The Impact of the TCJA on Small Business Taxation": A broader overview of the 2017 tax law changes affecting small businesses.
3. "Strategic Tax Planning for Small Businesses: Maximizing Deductions": Provides comprehensive guidance on various tax-saving strategies.
4. "Navigating the Qualified Business Income (QBI) Deduction": Explores the QBI deduction and its interaction with other tax provisions.
5. "The Role of Interest Expense in Small Business Financial Management": Discusses the importance of interest expense in overall financial planning.
6. "Common Mistakes Small Businesses Make When Filing Taxes": Highlights frequent errors and how to avoid them.
7. "Tax Implications of Business Financing Options for Small Businesses": Explores the tax consequences of different financing choices.
8. "IRS Audit Preparation for Small Businesses": Provides practical advice on preparing for a potential audit.
9. "The Future of Small Business Taxation in the United States": Offers insights and predictions on future tax law changes affecting small businesses.
| 163j small business exception: United States Code United States, 2013 The United States Code is the official codification of the general and permanent laws of the United States of America. The Code was first published in 1926, and a new edition of the code has been published every six years since 1934. The 2012 edition of the Code incorporates laws enacted through the One Hundred Twelfth Congress, Second Session, the last of which was signed by the President on January 15, 2013. It does not include laws of the One Hundred Thirteenth Congress, First Session, enacted between January 2, 2013, the date it convened, and January 15, 2013. By statutory authority this edition may be cited U.S.C. 2012 ed. As adopted in 1926, the Code established prima facie the general and permanent laws of the United States. The underlying statutes reprinted in the Code remained in effect and controlled over the Code in case of any discrepancy. In 1947, Congress began enacting individual titles of the Code into positive law. When a title is enacted into positive law, the underlying statutes are repealed and the title then becomes legal evidence of the law. Currently, 26 of the 51 titles in the Code have been so enacted. These are identified in the table of titles near the beginning of each volume. The Law Revision Counsel of the House of Representatives continues to prepare legislation pursuant to 2 U.S.C. 285b to enact the remainder of the Code, on a title-by-title basis, into positive law. The 2012 edition of the Code was prepared and published under the supervision of Ralph V. Seep, Law Revision Counsel. Grateful acknowledgment is made of the contributions by all who helped in this work, particularly the staffs of the Office of the Law Revision Counsel and the Government Printing Office--Preface. |
| 163j small business exception: Publicly Traded Partnerships Matthew W. Lay, Eric B. Sloan, Amy L. Sutton (Accountant), Tax Management Inc, Bloomberg BNA., ... analyzes in depth the U.S. federal income taxation of publicly traded partnerships and their partners--Portfolio description. |
| 163j small business exception: PPC Tax Planning Guide - Closely Held Corporations Albert L. Grasso, Linda Kitter, R. Barry Johnson, Elizabeth DiTommaso, 1993-08-01 |
| 163j small business exception: General Explanation of Tax Legislation Enacted in ... , 2005 JCS-5-05. Joint Committee Print. Provides an explanation of tax legislation enacted in the 108th Congress. Arranged in chronological order by the date each piece of legislation was signed into law. This document, prepared by the staff of the Joint Committee on Taxation in consultation with the staffs of the House Committee on Ways and Means and the Senate Committee on Finance, provides an explanation of tax legislation enacted in the 108th Congress. The explanation follows the chronological order of the tax legislation as signed into law. For each provision, the document includes a description of present law, explanation of the provision, and effective date. Present law describes the law in effect immediately prior to enactment. It does not reflect changes to the law made by the provision or subsequent to the enactment of the provision. For many provisions, the reasons for change are also included. In some instances, provisions included in legislation enacted in the 108th Congress were not reported out of committee before enactment. For example, in some cases, the provisions enacted were included in bills that went directly to the House and Senate floors. As a result, the legislative history of such provisions does not include the reasons for change normally included in a committee report. In the case of such provisions, no reasons for change are included with the explanation of the provision in this document. In some cases, there is no legislative history for enacted provisions. For such provisions, this document includes a description of present law, explanation of the provision, and effective date, as prepared by the staff of the Joint Committee on Taxation. In some cases, contemporaneous technical explanations of certain bills were prepared and published by the staff of the Joint Committee. In those cases, this document follows the technical explanations. Section references are to the Internal Revenue Code unless otherwise indicated. |
| 163j small business exception: Thriving on Chaos Tom Peters, 1988-11-30 The national bestseller that offers prescriptions for an economic world turned upside down. A New York Times bestseller for eleven months. |
| 163j small business exception: , |
| 163j small business exception: Circular A, Agricultural Employer's Tax Guide , 1991 |
| 163j small business exception: Farmer's Tax Guide , 1998 |
| 163j small business exception: Corporate Tax Law Peter Harris, 2013-03-07 Many corporate tax systems lack structure. Focusing on structural defects and how they are addressed in practice, this comprehensive and comparative analysis of corporate tax systems uses a conceptual framework to illustrate and analyse the many difficult issues corporations pose. This framework is enhanced by the examination of a large body of legal rules and practical considerations which demonstrate how corporate tax systems work in practice. While adopting a broad comparative approach, the analysis also drills down into the detail of influential corporate tax systems in order to illustrate the major issues they face and the options available to them. |
| 163j small business exception: Mergers, Acquisitions, and Buyouts, June 2022 Edition w/Letter (IL) Ginsburg & Levin, Rocap, |
| 163j small business exception: Mergers, Acquisitions, and Buyouts MARTIN D. GINSBURG, Jack S. Levin, Donald E. Rocap, 2022-01-23 Mergers, Acquisitions, and Buyouts, December 2021 By Martin D. Ginsburg, Jack S. Levin, Donald E. Rocap When structuring mergers and acquisitions, there's only one way to be sure that you've thought of all the tax and legal consequences: rely on Martin D. Ginsburg, Jack S. Levin and Donald E. Rocap as you plan, develop, and execute your mergers and acquisitions strategy. In this gold-standard resource for mergers and acquisitions analysis and guidance--available as a five-volume print set, a bundle with the print and CD-ROM editions, or online--these expert practitioners offer you: * Solutions to real-life business merger problems as they arise in negotiations * Step-by-step analysis of typical and non-typical company buyout and company merger transactional permutations * Checklists, flow charts, and other at-a-glance mergers practice materials Whether you represent the buyer, the seller, or another interested party, you can go straight to a model M&A agreement that gives you: * A complete document structured to embody your client's M&A interests * Clauses addressing a wide variety of specific mergers and acquisitions situations * Specific language for even the smallest mergers and acquisitions variations you're likely to encounter * Includes CD-ROM containing Mergers, Acquisitions, and Buyouts: Sample Acquisition Agreements When it comes to companies buying other companies--particularly public company acquisitions--seemingly every transaction raises something unique, Mergers, Acquisitions, and Buyouts is recently updated with: * New step-by-step methods for structuring transactions, with tax, SEC, corporate, HSR, accounting and other mergers considerations * New table summarizing and contrasting terms of pro-buyer, pro-seller, and neutral stock & asset purchase agreements * Practical guidance based on the latest mergers and acquisition news and the most recent corporate acquisition developments * New mergers legislation, M&A regulations, rulings, and M&A litigation outcomes impacting M&A transactions as reflected in recent mergers and acquisitions Frequently asked questions covered in Mergers, Acquisitions, and Buyouts: * What are the tax considerations in our M&A transaction? * Are there recent deals or developments affecting our M&A transaction? * How do we handle unwanted assets? * How do we handle reorganizations that are solely for voting stock? * What are the tax aspects of LBO structuring and financing? * What should we be taking into consideration regarding management compensation? * How do you execute a mergers and acquisitions strategy using Partnership, LLC, or REIT? |
| 163j small business exception: Self-employment Tax , 1988 |
| 163j small business exception: Taxation of Foreign Investment in U.S. Real Estate United States. Department of the Treasury, 1979 |
| 163j small business exception: Limiting Base Erosion Involving Interest Deductions and Other Financial Payments, Action 4 - 2016 Update Organization for Economic Cooperation and Development, 2016-12-15 The 2015 Report established a common approach which directly links an entity's net interest deductions to its level of economic activity, based on taxable earnings before interest income and expense, depreciation and amortisation (EBITDA). |
| 163j small business exception: Real Estate Mortgage Investment Conduits (REMICs) Reporting Information (and Other Collateralized Debt Obligations (CDOs)). , 1995 |
| 163j small business exception: Taxation of International Transactions Charles H. Gustafson, Robert J. Peroni, Richard Crawford Pugh, 2011 Designed for use in law schools, business schools and schools of management, this casebook outlines the determination and administration of U.S. income tax liabilities resulting from international transactions. Textual discussion, cases, rulings and problems, guides students through the basic tax considerations that confront foreign individuals and entities participating in the U.S. economy, and U.S. individuals and entities seeking to derive income abroad. Covers both the U.S. tax rules applicable to international transactions and the tax policy considerations underlying those rules. |
| 163j small business exception: General Explanation of the Tax Reform Act of 1986 , 1987 |
| 163j small business exception: Interrelated Computations for Estate and Gift Taxes United States. Internal Revenue Service, 1985 |
| 163j small business exception: Practice Before the IRS and Power of Attorney , 1996 |
| 163j small business exception: Surrogate Foreign Corporations (Us Internal Revenue Service Regulation) (Irs) (2018 Edition) The Law The Law Library, 2018-11-12 Surrogate Foreign Corporations (US Internal Revenue Service Regulation) (IRS) (2018 Edition) The Law Library presents the complete text of the Surrogate Foreign Corporations (US Internal Revenue Service Regulation) (IRS) (2018 Edition). Updated as of May 29, 2018 This document contains final regulations regarding whether a foreign corporation is treated as a surrogate foreign corporation. The final regulations affect certain domestic corporations and partnerships (and certain parties related thereto), and foreign corporations that acquire substantially all of the properties of such domestic corporations or partnerships. This book contains: - The complete text of the Surrogate Foreign Corporations (US Internal Revenue Service Regulation) (IRS) (2018 Edition) - A table of contents with the page number of each section |
| 163j small business exception: Farmer's Tax Guide - Publication 225 (For Use in Preparing 2020 Returns) Internal Revenue Service, 2021-03-04 vate, operate, or manage a farm for profit, either as owner or tenant. A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. It also includes plantations, ranches, ranges, and orchards and groves. This publication explains how the federal tax laws apply to farming. Use this publication as a guide to figure your taxes and complete your farm tax return. If you need more information on a subject, get the specific IRS tax publication covering that subject. We refer to many of these free publications throughout this publication. See chapter 16 for information on ordering these publications. The explanations and examples in this publication reflect the Internal Revenue Service's interpretation of tax laws enacted by Congress, Treasury regulations, and court decisions. However, the information given does not cover every situation and is not intended to replace the law or change its meaning. This publication covers subjects on which a court may have rendered a decision more favorable to taxpayers than the interpretation by the IRS. Until these differing interpretations are resolved by higher court decisions, or in some other way, this publication will continue to present the interpretation by the IRS. |
| 163j small business exception: Income Averaging United States. Internal Revenue Service, 1985 |
| 163j small business exception: Corporate Tax Reform Jane Gravelle, 2017-10-10 Interest in corporate tax reform that lowers the rate and broadens the base has developed in the past several years. Some discussions by economists in opinion pieces have suggested there is an urgent need to lower the corporate tax rate, but not necessarily to broaden the tax base, an approach that presents some difficulties given current budget pressures. Others see the corporate tax as a potential source of revenue. Arguments for lowering the corporate tax rate include the traditional concerns about economic distortions arising from the corporate tax and newer concerns arising from the increasingly global nature of the economy. Some claims have been made that lowering the corporate tax rate would raise revenue because of the behavioral responses, an effect that is linked to an open economy. Although the corporate tax has generally been viewed as contributing to a more progressive tax system because the burden falls on capital income and thus on higher-income individuals, claims have also been made that the burden falls not on owners of capital, but on labor income. The analysis in this report suggests that many of the concerns expressed about the corporate tax are not supported by empirical evidence. Claims that behavioral responses could cause revenues to rise if rates were cut do not hold up on either a theoretical or an empirical basis. Studies that purport to show a revenue-maximizing corporate tax rate of 30% (a rate lower than the current statutory tax rate) contain econometric errors that lead to biased and inconsistent results; when those problems are corrected the results disappear. Cross-country studies to provide direct evidence showing that the burden of the corporate tax actually falls on labor yield unreasonable results and prove to suffer from econometric flaws that also lead to a disappearance of the results when corrected, in those cases where data were obtained and the results replicated. Many studies that have been cited are not relevant to the United States because they reflect wage bargaining approaches and unions have virtually disappeared from the private sector in the United States. Overall, the evidence suggests that the tax is largely borne by capital. Similarly, claims that high U.S. tax rates will create problems for the United States in a global economy suffer from a misrepresentation of the U.S. tax rate compared with other countries and are less important when capital is imperfectly mobile, as it appears to be. Although these new arguments appear to rely on questionable methods, the traditional concerns about the corporate tax appear valid. While an argument may be made that the tax is still needed as a backstop to individual tax collections, it does result in some economic distortions. These economic distortions, however, have declined substantially over time as corporate rates and shares of output have fallen. Moreover, it is difficult to lower the corporate tax without creating a way of sheltering individual income given the low tax rates on dividends and capital gains. A number of revenue-neutral changes are available that could reduce these distortions, allow for a lower corporate statutory tax rate, and lead to a more efficient corporate tax system. These changes include base broadening, reducing the benefits of debt finance through inflation indexing, taxing large pass-through firms as corporations, and reducing the tax at the firm level offset by an increase at the individual level. Nevertheless, the scope for reducing the tax rate in a revenue-neutral way may be limited. |
| 163j small business exception: 2017 State Business Tax Climate Index Jared Walczak, Scott Drenkard, Joseph Henchman, 2017-09-28 The Tax Foundation's State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states' tax systems compare. While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how well states structure their tax systems, and provides a roadmap to improving these structures. |
| 163j small business exception: The Tax executive , 1987 |
| 163j small business exception: Corporate Profit Shifting Dorian L. Peters, 2015 Congress and the Obama Administration have expressed interest in addressing multinational corporations' ability to shift profits into low- and no-tax countries with little corresponding change in business operations. Several factors appear to be driving this interest. Economists have estimated that profit shifting results in significant tax revenue losses annually, implying that reducing the practice could help address deficit and debt concerns. Profit shifting and base erosion are also believed to distort the allocation of capital as investment decisions are overly influenced by taxes. Fairness concerns have also been raised. If multinational corporations can avoid or reduce their taxes, other taxpayers (including domestically focused businesses and individuals) may perceive the tax system as unfair. At the same time, policymakers are also concerned that American corporations could be unintentionally harmed if careful consideration is not given to the proper way to reduce profit shifting. This book is intended to assist Congress as it considers what, if any, action to curb profit shifting. This book discusses the methods used for shifting profits only to the extent that it is necessary for interpreting the data or discussing policy options. In addition, this book addresses tax havens; basic concepts and policy issues of U.S. international corporate taxation; and reforms of U.S. international taxation. |
| 163j small business exception: After Public Law Cormac Mac Amhlaigh, Claudio Michelon, Neil Walker, 2013-05-09 Public law has been conceived in many different ways, sometimes overlapping, often conflicting. However in recent years a common theme running through the discussions of public law is one of loss. What function and future can public law have in this rapidly transforming landscape, where globalized states and supranational institutions have ever-increasing importance? The contributions to this volume take stock of the idea, concepts, and values of public law as it has developed alongside the growth of the modern state, and assess its continued usefulness as a distinct area of legal inquiry and normativity in light of various historical trends and contemporary pressures affecting the global configuration of law in general. Divided into three parts, the first provides a conceptual, philosophical, and historical understanding of the nature of public law, the nature of private law and the relationship between the public, the private, and the concept of law. The second part focuses on the domains, values, and functions of public law in contemporary (state) legal practice, as seen, in part, through its relationship with private domains, values, and functions. The final part engages with the new legal scholarship on global transformation, analysing the changes in public law at the national level, including the new forms of interpenetration of public and private in the market state, as well as exploring the ubiquitous use of public law values and concepts beyond the state. |
| 163j small business exception: J.K. Lasser's Small Business Taxes 2020 Barbara Weltman, 2019-11-11 Maximize your bottom line with the nation's most trusted small business tax guide J.K. Lasser's Small Business Taxes 2020 is the small business owner's ultimate guide to a money-saving, stress-free tax season. Providing straightforward advice from the nation's most trusted tax expert on small business taxes, this book gives you the answers you need quickly, with clear, concise guidance. Updated to cover changes from the Tax Cuts and Jobs Act and other legislation, this edition also includes an e-supplement covering additional developments from Congress and the IRS to keep you fully up-to-date. A complete listing of all available business deductions and credits helps you identify those you qualify for, and includes critical information on dollar limits, recordkeeping requirements, and how to actually take the write-off—all the way down to the IRS form to use. Organizational and planning strategies help you get through the process quickly and with fewer headaches, and this year's changes to the tax laws are explained in terms of how they affect your filing. Keeping up with the intricacies of tax law and filing is a full-time job—but it's not your full-time job. You have a business to run. This book gives you the guidance you need in the time that you have so you can get taxes out of the way and get back to work. Learn which expenses qualify for deductions—and which ones don't Adopt a more organized recordkeeping system to streamline the filing process Explore small-business-specific strategies for starting or closing a business, running a sideline business, and operating in multiple businesses Decode the various forms and worksheets correctly with step-by-step guidance Audit-proof your return Review obligations for the “other taxes,” including payroll and excise taxes Every year, millions of small business owners overpay their taxes because they lack the time and expertise to make tax-sensitive business decisions throughout the year only to learn that it’s too late to act when it comes to tax time. Now you can put your money back where it belongs—in your business. J.K. Lasser's Small Business Taxes 2020 helps you take wise actions during the year and tells you how to file completely and accurately while maximizing your bottom line. |
| 163j small business exception: 2018 State Business Tax Climate Index Jared Walczak, Scott Drenkard, Joseph Henchman, 2017-10-17 The Tax Foundation's State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states' tax systems compare. While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how well states structure their tax systems, and provides a roadmap to improving these structures. |
| 163j small business exception: J.K. Lasser's Small Business Taxes 2021 Barbara Weltman, 2020-11-23 Minimize your taxes and maximize your refund with this expert guide to your small business tax return Taxes remain one of the biggest headaches and costs for small businesses around the United States. J.K. Lasser's Small Business Taxes 2021 delivers an approachable but expert guide in legally limiting your tax liabilities while maximizing your deductions and credits. You'll be in great hands as Barbara Weltman – attorney, expert, and author – shows you what tax relief is available to you and how to claim it. You'll discover how to: Make tax-savvy business decisions Take advantage of COVID-19-related tax breaks Pick the right forms to claim available deductions and credits Use legal and effective tax strategies to minimize your taxes payable Use sample forms and checklists to get organized Keep the right records in case the IRS comes calling Whether you’re filing your small business’ taxes or you work with a tax professional, J.K. Lasser's Small Business Taxes 2021 will walk you through the tax process for 2020 returns and tax planning for 2021 to optimize your tax savings and minimize your audit exposure. |
| 163j small business exception: J.K. Lasser's Small Business Taxes 2025 Barbara Weltman, 2024-12-05 Expert small business tax guidance from America’s favorite expert In the newly revised J.K. Lasser’s Small Business Taxes 2025: Your Complete Guide to a Better Bottom Line, renowned small business attorney and tax expert Barbara Weltman delivers the latest and most up-to-date edition of America’s most trusted small business tax guide. In the book, you’ll explore exactly how to minimize your 2024 business tax bill and position your business for 2025 tax savings with straightforward and comprehensive guidance that walks you through which deductions and credits to look out for and how to claim them. You’ll discover what kinds of tax relief and green energy tax breaks are legally available to your small business and how to access them, complete with specific instructions on how to properly fill out IRS tax forms, what records to keep in case the IRS has questions, and applicable dollar limits. You’ll also find: Tax facts, strategies, checklists, and the latest information you need to ensure you pay what you legally owe – and not a penny more Sample IRS forms that demonstrate how to properly claim the deductions and credits that apply to your small business New tax laws and the latest court decisions and IRS rulings that impact your bottom-line A complimentary new e-supplement containing the latest developments from the Internal Revenue Service (IRS) and Congress A must-read roadmap to properly completing this year’s business taxes, J.K. Lasser’s Small Business Taxes 2025 is your comprehensive and up-to-date guide to legally minimizing your tax bill while making sure Uncle Sam gets what he’s owed. |
| 163j small business exception: J.K. Lassser's Small Business Taxes 2024 Barbara Weltman, 2023-11-30 Expert small business tax guidance from America’s favorite expert In the newly revised J.K. Lasser’s Small Business Taxes 2024: Your Complete Guide to a Better Bottom Line, renowned small business attorney and tax expert Barbara Weltman delivers the latest and most up-to-date edition of America’s most trusted small business tax guide. In the book, you’ll explore exactly how to minimize your 2023 business tax bill and position your business for 2024 tax savings with straightforward and comprehensive guidance that walks you through which deductions and credits to look out for and how to claim them. You’ll discover what kinds of tax relief and green energy tax breaks are legally available to your small business and how to access them, complete with specific instructions on how to properly fill out IRS tax forms, what records to keep in case the IRS has questions, and applicable dollar limits. You’ll also find: Tax facts, strategies, checklists, and the latest information you need to ensure you pay what you legally owe – and not a penny more Sample IRS forms that demonstrate how to properly claim the deductions and credits that apply to your small business New tax laws and the latest court decisions and IRS rulings that impact your bottom-line A complimentary new e-supplement containing the latest developments from the Internal Revenue Service (IRS) and Congress A must-read roadmap to properly completing this year’s business taxes, J.K. Lasser’s Small Business Taxes 2024 is your comprehensive and up-to-date guide to legally minimizing your tax bill while making sure Uncle Sam gets what he’s owed. |
| 163j small business exception: PPC's Guide to Limited Liability Companies Practitioners Publishing Co. Staff, 2005-11-01 Technical guidance and practice aids for CPA's for converting or forming an LLC, to terminating, to liquidating allocations, to Estate Planning for LLC members. |
| 163j small business exception: J.K. Lasser's Small Business Taxes 2023 Barbara Weltman, 2022-12-01 Comprehensive guide to small business tax write-offs and strategies from a leading name in tax Small business owners in the US face enough challenges without overpaying tax. Despite this, millions of small businesses miss out on crucial deductions, tax credits, and tax-saving moves every year, resulting in higher-than-necessary tax bills. In J.K. Lasser’s Small Business Taxes 2023: Your Complete Guide to a Better Bottom Line, renowned attorney and small business advocate Barbara Weltman offers a thorough and exhaustively researched roadmap to legally minimizing your tax liability and maximizing your deductions and credits. In the book, you’ll find tax facts and planning strategies that help you make business decisions in the most tax-efficient way possible. You’ll also discover: A complete list of the business expense deductions and tax credits available to you and what you need to do to qualify for them Up-to-date info on current tax law and procedure, including information on the latest relevant legislation Guidance on avoiding tax penalties and minimizing audit risk A heads-up on coming changes to help you plan for next year’s taxes Sample forms and checklists to help you get organized and help you stay tax compliant A free e-supplement that includes the latest developments from the IRS and Congress A concise and plain-English guide for every small business owner in America, Small Business Taxes 2023 is the detailed and accessible tax overview you’ve been waiting for. |
| 163j small business exception: General Explanations of the Administration's Revenue Proposals United States Dept of the Treasury, 2018-03-02 This work has been selected by scholars as being culturally important, and is part of the knowledge base of civilization as we know it. This work was reproduced from the original artifact, and remains as true to the original work as possible. Therefore, you will see the original copyright references, library stamps (as most of these works have been housed in our most important libraries around the world), and other notations in the work. This work is in the public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work. As a reproduction of a historical artifact, this work may contain missing or blurred pages, poor pictures, errant marks, etc. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant. |
| 163j small business exception: Congressional Record United States. Congress, 2017-11 |
| 163j small business exception: Reasonable Compensation Anne E. Moran, ... analyzes the issues relating to the deduction by an employer for a reasonable allowance under [section] 162(a) for compensation paid with regard to personal services rendered. It discusses in depth the factors applied in determining reasonableness, the necessity for the actual performance of services, situations where a deduction for reasonable compensation is not allowable, and other aspects of reasonable compensation. Various tax planning and controversy considerations also are discussed--Portfolio description (p. iii). |
| 163j small business exception: Mergers, Acquisitions, and Buyouts , 2015-01-01 |
| 163j small business exception: Income Taxation of Trusts and Estates Alan S. Acker, Bloomberg BNA., Tax Management Inc, ... provides detailed coverage of the rules governing the income taxation of estates, trusts, and their beneficiaries--Page iii. |
| 163j small business exception: Cash Or Deferred Arrangements David L. Raish, |
Basic questions and answers about the limitation on the deduction fo…
Prior to the 2017 Tax Cuts and Jobs Act (TCJA), section 163 (j) of the Internal Revenue Code applied only to certain interest paid or accrued by corporations. However, the …
Sec. 163(j) business interest limitation: New rules for 2022
Dec 1, 2022 · After providing some background on the Sec. 163 (j) business interest limitation, this item discusses how the rules for calculating ATI have changed …
26 U.S. Code § 163 - Interest | U.S. Code | US Law | LII / Legal ...
In the case of a taxpayer other than a corporation, the amount allowed as a deduction under this chapter for investment interest for any taxable year shall not …
Section 163 (j) Interest Expense Limitation - McDermott
Mar 21, 2018 · While the section 163(j) limitation applies to both third party and certain related party interest expense, the Base Erosion and Anti-Abuse Tax (the …
Treasury and IRS release final Section 163(j) regulations - PwC
Section 163 (j), which was modified by the 2017 Tax Reform Act and the CARES Act, limits US business interest expense deductions to the sum of business interest income, 30% …
Basic questions and answers about the limitation on the deduction …
Prior to the 2017 Tax Cuts and Jobs Act (TCJA), section 163 (j) of the Internal Revenue Code applied only to certain interest paid or accrued by corporations. However, the TCJA …
Sec. 163(j) business interest limitation: New rules for 2022
Dec 1, 2022 · After providing some background on the Sec. 163 (j) business interest limitation, this item discusses how the rules for calculating ATI have changed for 2022 and beyond and how …
26 U.S. Code § 163 - Interest | U.S. Code | US Law | LII / Legal ...
In the case of a taxpayer other than a corporation, the amount allowed as a deduction under this chapter for investment interest for any taxable year shall not exceed the net investment income …
Section 163 (j) Interest Expense Limitation - McDermott
Mar 21, 2018 · While the section 163(j) limitation applies to both third party and certain related party interest expense, the Base Erosion and Anti-Abuse Tax (the BEAT) can also apply to …
Treasury and IRS release final Section 163(j) regulations - PwC
Section 163 (j), which was modified by the 2017 Tax Reform Act and the CARES Act, limits US business interest expense deductions to the sum of business interest income, 30% (or 50%, as …
Strategic considerations for the newly restrictive 163(j)
Jul 21, 2023 · The Tax Cuts and Jobs Act amended IRC Section 163(j) to limit the deduction for net business interest expense in excess of interest income. The limitation is based on a …
About Form 8990, Limitation on Business Interest Expense Under Section ...
Information about Form 8990, Limitation on Business Interest Expense Under Section 163 (j), including recent updates, related forms and instructions on how to file. Use Form 8990 to …
KPMG report: Final regulations under section 163(j), limitation …
Jan 19, 2021 · Final regulations under section 163(j) concerning the limitation on deductions for certain business interest expense (“BIE”) are published today, January 19, 2021, in the Federal …
Sec. 163(j) planning considerations - The Tax Adviser
Aug 1, 2024 · In 2017, as part of the law known as the Tax Cuts and Jobs Act, P.L. 115-97, Congress significantly restricted the ability to deduct business-related interest expense with the …
How the 163(j) Limitation Affects Business Interest Deductions
Feb 26, 2025 · The Section 163(j) limitation caps deductible business interest expense at 30% of adjusted taxable income (ATI), plus business interest income and floor plan financing interest. …
