Section 199A wages

Technical topics regarding tax preparation.
#1
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287
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michigan
I have a Sub S construction client who pays a management fee to another Sub S company he has and takes payroll from the 2nd
company. The is no payroll from the construction company. The second company was set up to have one company with payroll instead of several companies all having payroll to the same people.

The client makes appx 700K per year. The 199A deduction from the construction company is very small with no W2 wages.
If I were to put the management fees on the wages line the 199A deduction becomes substantial.

From what I'm reading only wages count and management fees would count for code W. One solution I guess would be to put the management fees on the wages line of the Sub S return. I'm not sure this would be the way to go. The S return has not been submitted as yet. The client was late in getting the information to me.

Any thoughts/ideas on this would be greatly appreciated.
 

#2
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496
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12-Jun-2014 6:13pm
Location:
North Carolina
Couldn't he elect to aggregate the two companies?
Because on T.A. ten was the most you were allowed
 

#3
Posts:
287
Joined:
1-Jul-2014 9:25am
Location:
michigan
Thanks I am forgot about the aggregation rules. I am going to have to figure out the mechanics in Pro Series I have not done one yet.
 


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