Sec 199A was part of a tax reform passed quickly in Congress, which many said produced oversights. One loophole often cited earlier this year involved splitting a company into parts (aka “crack and pack”) so high earners such as lawyers, doctors and other professionals who didn’t qualify for the 20 percent deduction could get the benefit by running profits through a cooperative. The new regulations all but kill crack and pack.
Said Smith, “One idea that’s going to get more consideration now is [how] to operate as a C corporation if you’re otherwise going to be ineligible for the 199A deduction.”