Benefit Out-of-Favor Service Businesses

Tax Saving Tips

If you operate an out-of-favor business (known in the law as a “specified service trade or business”) and your taxable income is more than $207,500 (single) or $415,000 (married, filing jointly), your Section 199A deduction is easy to compute. It’s zero.
This out-of-favor specified service trade or business group includes any trade or business
• involving the performance of services in the fields of health, law, consulting, athletics, financial services, and brokerage services; or
• where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners; or
• that involves the performance of services that consist of investing and investment management trading or dealing in securities, partnership interests, or commodities. For this purpose, a security and a commodity have the meanings provided in the rules for the mark-to-market accounting method for dealers in securities [Internal Revenue Code Sections 475(c)(2) and 475(e)(2), respectively].