Wisconsin’s Rejection of 199A Deduction and other Modifications to the Federal Tax Cuts & Jobs Act
by: Benjamin D. LaFrombois, von Briesen & Roper, s.c.
The Federal Tax Cuts and Jobs Act of 2017 (the “Act”) reduced corporate tax rates (C corporation) and allowed for a deduction of certain income from pass-through entities. These changes create opportunities for business owners to reduce taxes with good planning. Every business owner should reassess whether to be taxed as a C corporation, a pass-through entity (S corporation or partnership) or combination thereof.
For the Wisconsin business owner, the re-assessment takes heightened importance because Wisconsin rejected one of the major benefits of the Act – the Section 199A deduction of certain pass-through income. By losing the Section 199A deduction for Wisconsin income tax purposes, the Wisconsin taxpayer may find that a C corporation has significant tax benefits.
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