Deep Dive on the Tax Cuts and Jobs Act

QBI Deduction Issues for Professionals

Sidney Kess, JD, LLM, CPA

Most attorneys, accountants, and other professionals operate as unincorporated sole practitioners, or through partnerships and limited liability partnerships (LLP), making them owners of pass-through entities. Such professionals may be able to cut the effective tax rate on the income from their practices through the use of the qualified business income (QBI) deduction [Internal Revenue Code (IRC) section 199A]. This deduction, which was created by the Tax Cuts and Jobs Act of 2017 (TCJA), is up to 20% of QBI, but limitations and other rules can limit or prevent any write-off. This article discusses some key issues related to the QBI deduction for professionals in light of recently proposed regulations (REG-107892-18, 8/8/18).