IRS Targets Loopholes for $415 Billion Business Owner Tax Break
- Treasury officials say ‘crack and pack’ technique is abusive
- Law blocks high-earning service providers from 20% deduction
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The Internal Revenue Service provided some long-awaited answers for business owners hoping to dodge the limits on a juicy new tax break.
The IRS’s proposed regulations make it clear that the agency considers a planning technique known as “crack and pack” to be abusive. The move had been eyed by professional service providers, such as law and accounting firms, to get around income limits set for pass-through businesses, whose income is reported on their owners’ personal returns.