Small Businesses Have a New Tax Break, but There Are Many ‘Ifs’

Small businesses may be able to receive a big tax break this year, thanks to the new rules. They also may face a big headache: figuring out whether the tax break applies to them. The problem is that a centerpiece of the legislation is a write-off for “qualified business income,” but it’s unclear whether certain activities count. That is sowing confusion as the April deadline for filing the first returns under the law approaches. “Parts of the law were not well thought out,” said Lisa Goldman, a partner in the international tax practice of the accountancy Berdon L.L.P. Congress was in a rush to enact the law before the end of 2017 and was more concerned, she said, with big businesses than small: “I’m not surprised it’s convoluted.” While the Internal Revenue Service issued additional clarifications in January, much of the uncertainty continues, often focused on a 20 percent deduction for qualified business income.