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Pass-Through and Charitable Deductions Explained

Insight Brent Nelson Brent Nelson · October 05, 2019

Rimon's Brent Nelson co-writes an article on pass-through and charitable deductions. An overview of how these two deductions function, with an eye toward stacking their benefits.

The Pass-Through Income Deduction under Code Section 199A (199A Deduction) allows taxpayers to deduct up to 20% of their pass-through business income. However, the deduction is either eliminated or limited when a taxpayer’s taxable income exceeds certain thresholds. Despite this limitation, charitably inclined high earners can stack tax savings by strategically making charitable gifts to push their taxable income below the 199A Deduction thresholds. This mechanism allows the taxpayer to receive both a federal income tax charitable deduction (Charitable Deduction) and the full 199A Deduction. The taxpayer has two primary options for making strategic charitable gifts, which we'll address in an upcoming article. First, we'd like to give a quick overview of how these two deductions function. Read the full article.

 


Brent Nelson assists U.S. and international individuals, families and financial institutions in tax, estate planning and family business matters. In addition, he frequently speaks and writes on estate and tax developments. Brent develops estate plans in a wide variety of circumstances, from basic estate plans to complex plans for high net worth individuals and families. He also assists them with related business succession and charitable goals. For high net worth clients, he uses sophisticated tax planning techniques involving irrevocable trusts, life insurance, private foundations and family limited partnerships. Other lawyers often engage Brent to help their clients in complex planning. Read more.