Question

companies got a special 20% deduction under the 2017 tax reform. a. Foreign subsidiaries of US Companies b. Pass through Companies c. Sole Proprietorships d. US subsidiaries of foreign companies

Answer 1

Companies got a special 20% deduction under the 2017 tax reform.

The 20 percent deduction is applicable on pass-through income from sole proprietors, limited liability companies, partnerships and S corporations. The 20 percent deduction applies to Qualified Business Income (QBI), which includes the net amount of income, gains, deductions and losses associated with a trade or business, but not investment-related items, such as capital gains or losses, dividends and interest income. The new deduction is taken below the line, which means it reduces taxable income not adjusted gross income.

Answer: b. Pass through companies