The New England Accounting Advisor

The Biden administration recently announced plans to raise taxes on corporations and other businesses, including tax increases on some pass-through business owners. With these tax increases a possibility, it may be wise to start thinking about steps and strategies to lessen the impact of hikes of a tax rate. These options generally look to accelerate income and delay deductions, which is the opposite of conventional wisdom.

If there are winners and losers under the new tax reform law, pass-through entities—S corporations, partnerships, LLCs, and sole proprietorships (collectively, pass-through entities)—can count themselves among the winners. The tax reform law introduced as the Tax Cuts and Jobs Act (TCJA) is primarily designed to provide tax cuts for businesses of all types, and it delivers on that goal. It also adds complexity, and in some circumstances, the potential tax savings for C corporations may outpace the savings afforded to pass-through entities. This formerly unorthodox scenario and many other new provisions for pass-through entities require careful study to ascertain the full impact of TCJA on such businesses.