The CPA Desk

A Thought Leader Production by PKFTexas

How Tax Reform Affects Pass-Through Entities

Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemanski, and I’m back again with Frank Landreneau, one of our international tax directors. Frank, welcome back to the Playbook.

Frank: Thanks, Jen. It’s great to be back.

Jen: We spent some time talking about tax reform and how it impacts international corporations and individuals, but what about entrepreneurs and middle market groups using pass-through entities? Is there anything they should be focusing on?

Frank: That’s a good question, because before, while we were focusing on the tax law themselves, what’s interesting is that the tax law treats different tax payers differently. So, for example, as we talked in previous segments, the new tax law severely favors corporate tax payers. Not so much for those who are doing business through entities such as partnerships, S corporations, which really kind of represents most of the entrepreneurs out there.

One of the things that’s top of mind because of the new proposed regs that came out earlier is the new toll tax; for example, how is it computed and so forth. So, things to keep in mind are that the toll tax inclusion amount is determined at the entity level, and so an entrepreneur would get several different K1s from different entities with the inclusion amount and so forth. But it’s up to the individual owner to make certain tax selections, to report the amount; all those kinds of things which are very timely because all of this has to be done by October 15th.

Jen: So, does the individual need to know anything about the toll tax, or is it really for those entrepreneurs?

Frank: Really the entrepreneurs, but the entrepreneurs as tax payers are the individual and the pass-through entities are the entities they do business from, but all of these different things have to be done at the owner level, at the individual level.

Jen: It sounds like they’ll need to give you a call to help them with some of their structuring then.

Frank: Definitely.

Jen: Perfect. We’ll get you back to talk about that.

Frank: All right. Thank you.

Jen: Thanks. To learn more about other international topics, visit PKFTexas.com/internationaldesk. This has been another Thought Leader Production brought to you by PKF Texas The Entrepreneur’s Playbook.