Passthrough Entities

A Full Service CPA Firm


With the passage of the Tax Cuts and Jobs Act into law, which goes into effect beginning with the 2018 tax year, many people have had questions about passthrough entities and the passthrough income tax deduction. We have the resources to help you navigate through these tax changes and make the best decision. We can help you to gain a better understanding of what qualifies as a passthrough entity and how the passthrough income tax deduction will impact your tax situation. Here is some further information regarding the services we offer:

Passthrough Entity Formation- We can work with you and discuss your current tax situation to see if it makes sense for you to form a passthrough entity. Whether you are thinking about starting a business or are currently self-employed and want to discuss setting up a passthrough entity, we can help. We will assist you every step of the way with the pass through entity formation and additional items such as obtaining and Employer Identification Number (EIN) and tax elections if necessary.  We can assist with formation of passthrough entities such as the following:


· Partnership

· Limited Liability Company (LLC Tax Election Assistance Also Available)

Passthrough Entity Tax Changes-The Tax Cuts and Jobs Act has provided a passthrough income tax deduction for many taxpayers with passthrough income from a qualified business. Individuals with “qualified business income” from a passthrough entity will be allowed to deduct 20% of “qualified business income” from taxable income. There are limitations on this deduction depending on the amount of “qualified business income”, source of “qualified business income” from a “specified service trade or businesses” and taxable income over the threshold.  If your taxable income is over the threshold the passthrough income tax deduction is phased out depending on the source of the “qualified business income” (If the “qualified business income” is from a “specified service trades or businesses” the passthrough income tax deduction is disallowed completely if over the threshold), the amount of W-2 wages paid by the passthrough entity, and/or the passthrough entity’s basis in tangible assets. We will go over your individual tax situation to determine the amount of the passthrough income tax deduction you can claim on your tax return and discuss how the regulations mentioned above apply to your individual tax situation. We can also work with you to help you gain a better understanding of what qualifies as “qualified business income” and what lines of work fall under the limitations placed on “specified service trades or businesses”, as well as how the threshold limits will impact your potential passthrough income tax deduction. We will work with you to make sure your passthrough entity and/or personal income tax returns are fully prepared and filed, and answer any questions you may have during the process. We strive to take the complexity out of the tax filing and reporting process and to make you feel comfortable with these tax law changes. 

Contact our team today to see how we can help your team. 

Contact Us

Berardi CPA PLLC

250 Mill Street Suite 620 Rochester, NY 14614

(585) 364-6235