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Authors may be eligible for proposed IRS regulation on 20% deduction for income from pass-through businesses

Based on proposed regulations issued by the IRS and Treasury that would add a new provision of the Internal Revenue Code allowing owners of sole proprietorships, S corporations, LLCs, or partnerships a deduction of up to 20% of the income earned by the business, writers will be eligible for the deduction, said Robert Pesce, an accountant with Marcum LLP.

“I read the 184-page Proposed Regulations,” said Pesce. “There is nothing in the regs that excludes authors from the deduction or indicates an author is a SSTB [Specified Service Trade or Business category, which is excluded from the deduction]. The IRS has a hearing on this in October. The rules for authors are not crystal clear yet. Some folks are wondering if this was an error or omission (based on the rules excluding actors, performers, musicians).”

Mr. Pesce is advising his author clients to pay their 3rd quarter taxes without the 20% reduction and adjust the 4th quarter payment accordingly.

Read Proposed IRS regulations issued providing guidance on new 20% deduction for flow-through entities