Selling Your Business – Watch Out For Effect On 199A Pass-Through Deduction

April 05, 2019

My conclusion is that 199A considerations are unlikely to make or break a deal and in many contexts, they will not be significant enough to risk screwing up the deal – Reilly’s Second Law of Tax Planning – Sometimes it is better to just pay the taxes.  On the other hand, it would be wise to incorporate 199A considerations and there will probably be times when a small tweak might preserve 199A deductions as a business is being disposed of.

I got some thoughts from Louis Vlahos of Farrell Fritz, a Long Island law firm.  Mr.Vlahos wrote something for his firm’s blog on the issue back in February.

Mr. Vlahos in his piece leads with a much more comprehensive background on 199A and of course you can find a lot more detail in other places on this platform.  This piece is focused on a very narrow issue and is a sort of heads up.

I’m pleased to see that I am not the only writer making up laws.  Here is Mr. Vlahos on something similar to my Second Law – Sometimes it is is better to just pay the taxes.  He has.

Thou shalt not pursue any undertaking solely for tax purposes , but thou shalt first consider the business purpose for such undertaking and, if thou findeth such purpose worthy of attainment, then, and only then, shalt thou contemplate the tax benefit, but never shalt thou lose sight of your primary business purpose.

To read the full article, please click here.

  • Related Practice Areas: Tax
  • Featured Attorneys: Louis Vlahos
  • Publications: Forbes