You can save a lot of money through one section of the tax code.
I’m talking about Section 199A.
When you rent an office or other building to your personally owned C Corporation, it will claim a valuable 20-percent qualified-business-income (QBI) deduction.
Of course, since we’re dealing with the IRS, the devil is in the details.
Our fact-filled article will help you in three ways:
1. One key to the provision of the tax law you need to know. We’ll explain here.
Yes. If the rental rises to the level of section 162 trade or business, then renting a building to your C corporation qualifies for the 20-percent Section 199A deduction. Why is Section 162 so significant?
2. If you or your spouse rents a building to your S corporation than what happens. You’ll learn that here.
Amazing news. The rental automatically qualifies as a Section 162 trade or business.
3. Most important IRS rule you’ll learn here.
It’s important to remember that with self-rental to pass-through business-like S corporation, the QBI takes on the attributes of the tenant. It means, if you rent to an out-of-favor-specified service-trade or company (as defined by Section 199A), you must treat the rental as an out-of-favor-specified service-trade or business.