Can a Partnership Overcome the W-2 Wage Limitations Under Sec. 199?

Many taxpayers have sought to use the lucrative and broad-based incentives under new Code Sec. 199 since the domestic production activities deduction (DPAD) was created in 2004. But partnerships and other passthroughs are finding their access to the deduction limited by the amount of W-2 wages that can be passed through to the owners. In some instances, those limitations could block a partnership from taking the deduction at all, notes James M. Kehl in a recent issue of TAXES—The Tax Magazine from CCH. In this article, Mr. Kehl examines in detail strategies practitioners can use to help passthrough owners optimize their ability to use the DPAD to reduce their tax burdens. He offers approaches that will help partnerships leverage these tax incentives that are being used by many companies to achieve significant tax savings.

* * * * *

This story is from the CCH’s monthly Focus on Tax newsletter, which provides advise and guidance on federal and state tax issues for tax and accounting professionals.

Read this article from CCH’s Journal of Taxation of Financial Products.


Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

All stories by: Wolters Kluwer Tax and Accounting