Do Lawyers Benefit from Section 199a?

The Tax Cuts and Jobs Act’s flagship provision was to reduce the corporate tax rate from a max of 37% down to a low, flat rate of 21%. Overnight, U.S. C corporations became more competitive in the global marketplace, and here at home they had grand plans for the tax savings they were bound to accumulate. Their good fortune made pass-through entity owners question whether their entity selections were still viable. Fortunately, the tax law also provided a break for these concerned business owners: the potential to take a 20% deduction off of their bottom line. This deduction, called the Qualified Business Income Deduction, can greatly reduce the tax bills of some flow-through entity owners, but others may not be as lucky. Lawyers in particular may find themselves at a disadvantage.