As you may know by now (and you’ll certainly know if you’re a regular reader of the Tax Reduction Letter), the new tax code Section 199A can give you a fat deduction of up to 20-percent of your taxable income reduced by net capital gains.
The problem was, until recently, the IRS never provided a definitive definition of “net capital gains.”
Well, the fog has lifted and the IRS, at long last, has clarified the net capital gains component of the Section 199A deduction.
What does this mean to you? You’ll find out when you read my new article titled Tax Tips: IRS Clarifies Net Capital Gains in Final 199A Regulations.
Three ways our fact-filled article can help you:
- You’ll learn exactly what the new regulation says. The final regulations provide a definition of net capital gain that reads as follows: “Net capital gain means net capital gain as defined in section 1222(11) plus any qualified dividend income (as defined in section 1(h)(11)(B)) for the taxable year.” Yes, we know this is very technical but we’ll explain it in easy-to-understand language when you read the full article.
- We’ll introduce you to the supreme commander. When it comes to computing your new 20-percent tax deduction, Section 199A(a)(2) is the ultimate authority. It’s the section that tells you how to reduce your taxable income by your net capital gain (now defined). All will be made crystal-clear when you read the full article.
- We’ll explain what the code and regulations mean to you. For the Section 199A calculation, your net capital gains are all net capital gains taxed at a preferred tax rate plus dividends that are taxed at preferred capital gains rates. We’ll provide an example that will make everything clear when you read the full article.