Bloomberg Law
March 27, 2018, 6:39 PM UTC

How Firms Could Sidestep Tax Law’s Pass-Through Deduction Limits

Lydia O'Neal

Professional service businesses are weighing the possibility of spinning off administrative or other back-office units of their pass-through businesses to qualify for a 20 percent deduction under the new tax law.

Such moves could help law firms and others sidestep the new tax code Section 199A deduction’s exclusions, practitioners told Bloomberg Tax, though most are waiting for the Internal Revenue Service to issue guidance before moving to restructure.

“Law, accounting-any of the businesses that don’t qualify in and of themselves for the 199A deduction, for whatever reason, whether they’re specified services, or whether it’s just a skills and reputation issue-you could do it with any of them,” said Michael Greenwald, a partner at Friedman LLP. “It would be ...

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