Twenty Percent Reduction For Business Owners

[Christian]

In trying to understand these new rules I have this situation. A client and his business partner own an LLC. The client receives a W-2 each year from the partnership. As I read the rules his W-2 income is not subject to the twenty percent reduction. Am I correct on this ? The twenty percent taken at the corporate level ?

[Catherine]

First question is WHY is he getting a W2 from a partnership he owns?  He should be getting "guaranteed payments" on a K-1, subject to SE tax.  At first glance there are more problems than merely "does this get the reduction" going on.

[Christian]

Oops. It looks as if I have made an error  and confused clients. Have patience you too will get older. 

[Lee B]

2 hours ago, Christian said:

In trying to understand these new rules I have this situation. A client and his business partner own an LLC. The client receives a W-2 each year from the partnership. As I read the rules his W-2 income is not subject to the twenty percent reduction. Am I correct on this ? The twenty percent taken at the corporate level ?

First the the 20 % PTE deduction is taken on Form 1040 on the lower of QBI or Form 1040 Taxable  Income.

Therefore you could have positive QBI and zero taxable income resulting in a zero PTE Deduction.