Biden-Harris Tax Proposals: Section 199A Disparities

Watch Benjamin M. Willis, contributing editor with Tax Notes Federal, and Jed Bodger, vice president of taxation at the Sierra Nevada Corp., discuss their recent article examining how the Biden-Harris proposed corporate tax and long-term capital gains rates increases logically lead to eliminating all or part of section 199A passthrough deduction to mitigate tax rate disparities and choice of entity gamesmanship.

Here are a few highlights . . .

On the goals of section 199A

Jed Bodger: [Section 199A] creates disparity and different rate pools for different types of businesses. On a broad scale, section 199A is a tax deduction for passthrough entities like partnerships, [limited liability companies], and S corporations, and it is available for qualified trades and businesses.

What section 199A does is provide a 20 percent deduction for qualified business income, which reduces the overall effective rate for members or partners of these passthrough entities from

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