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ERROR: type should be string, got "https://www.barrons.com/articles/its-really-hard-to-figure-out-if-you-qualify-for-a-pass-through-tax-exemption-51553338816\nIt’s Really Hard to Figure Out if You Qualify for a Pass-Through Tax Exemption\nDan Weil\nMarch 23, 2019 7:00 am ET\nPhotograph by Annie Spratt\nThe new tax law (the Tax Cuts and Jobs Act of 2017) offers a 20% deduction for pass-through income. That can include money you’ve earned from sole proprietorships, partnerships, S corporations, and limited liability companies (LLCs).\nBut not everyone qualifies, and many experts say the rules are hard to understand.\n“It’s quite an experiment which adds all kinds of complexities,” says Steven Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center with 25 years of experience as a tax attorney, most recently at Ropes and Gray. “What qualifies for the deduction is arbitrary. It’s hard to apply in situations close to the line.”\nTwo categories in particular are tough to interpret: the rules for skill- or reputation-based businesses, and the rules for landlords.\nIf you’re in a service business\nCongress denied the pass-through deduction for high-income owners of many service businesses, including health, law, accounting, brokerage, performing arts, athletics, and consulting.\nCongress also nixed the deduction for owners of other business whose principal asset is the reputation or skill of the employees or owners. Ultimately, the Treasury Department narrowed this extra exclusion, applying it only to businesses that earn endorsement, licensing, or appearance fees based on their owners and employees’ reputation or skill.\nBut Congress didn’t exclude all service businesses from the tax benefit, including architecture and engineering firms. This has led to some confusion among experts. “The businesses of architects and engineers clearly are based on the skill and reputations of the employees,” says Rosenthal. “I can’t figure out why they are still favored.”\nIn addition, the loosening of the Treasury’s restriction on reputation/skill businesses may extend the tax benefit to other businesses, such as professional gamblers, Rosenthal notes. That seems in conflict with the tax law’s elimination of gamblers’ ability to deduct losses as a trade or business. “There’s an arbitrariness in picking winners and losers,” he says.\nA final caveat: business owners who are filing singly and earning taxable income of more than $157,000 a year are also not eligible to take the full deduction.\nIf you’re a landlord\nTony Nitti, a partner at accounting/business consulting firm RubinBrown in Aspen, Col., says the biggest unknown regarding the pass-through deduction is what to do about rental property. Owners are only allowed to take the deduction in a business carried on with regularity. But it’s unclear when a rental meets that standard, he says.\nThe Treasury clarified the situation somewhat with a safe-harbor notice allowing the owner to qualify if the property they own requires 250 hours of rental services, such as arranging repairs, annually. But this excludes any property leased on a triple-net basis, where tenants pay taxes, insurance, and maintenance costs for the property they rent.\nUnfortunately for those seeking the tax benefit, “that’s generally how big landlords structure their leases,” Nitti says. “So does the landlord get the 20% deduction? We don’t have the answer.”\nThe new tax law (the Tax Cuts and Jobs Act of 2017) offers a 20% deduction for pass-through income."