Maximizing business owners’ section 199A deductions and business asset protections

Owners of closely held businesses have tremendous new opportunities to maximize their federal tax savings and protect their assets if their businesses are properly structured. Many business owners, however, may be unaware of recent federal tax law changes that can deliver significant savings and unaware of how a skillfully drafted limited liability company (LLC) agreement can provide powerful statutory asset protections and major federal tax savings.

Realize major section 199A tax deductions

If you are an owner of a closely held business that is properly structured, you can take tax deductions of up to 20 percent under new Internal Revenue Code section 199A. To take advantage of this very complex provision, which became effective January 1, 2018, you many need to restructure your business through careful planning. This process can be very beneficial as the yearly federal tax savings under section 199A can be substantial—often tens of thousands of dollars or more.

Protect assets with the right LLC operating agreement

LLCs and corporations both offer statutory liability shields that protect the personal assets of their owners from claims by creditors and other third parties. LLCs, however, also provide special and very powerful protections—charging order protections and pick-your-partner protections—that corporations do not provide. LLC members are often able to resist third-party lawsuits far more effectively than corporate shareholders. A carefully crafted LLC operating agreement also can protect a business owner’s personal, family, and business assets from lawsuits filed by fellow LLC members.

LLC agreements affect section 199A tax deductions

The structure of your LLC agreements can significantly impact your section 199A tax deductions, including the level of tax benefits you can obtain. The interconnection between these two areas makes it critical to utilize the expertise of an attorney who is an expert in both areas.

Specialized expertise in 199A deductions and LLC creation

Attorney John Cunningham is a nationally recognized section 199A and LLC lawyer licensed to practice in New Hampshire and Massachusetts and represents clients in other jurisdictions under local rules. He is one of the few attorneys with substantial knowledge and practice expertise in working with clients on both section 199A and LLC matters. He has written major books on how to maximize tax deductions under section 199A and how to effectively draft LLC operating agreements.

If you would like to learn more about section 199A deductions or LLC agreements, please contact John Cunningham. The initial consultation is free.


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