Learn how co-ops escape the $10,000 cap on state and local tax deductions.
Co-ops have an out when it comes to the $10,000 deduction. By its terms, Section 164(b)(6)(B) which imposes the $10,000 SALT Cap is limited to the taxes allowed as a deduction under Sections 164(a)(1), (2) and (3), and (b)(5). Section 216 which allows tenant-stockholders to deduct their proportionate share of the real estate taxes allowable as a deduction to the corporation, on the other hand, does not depend on Section 164 for deductibility at the individual level. The Joint Committee on Taxation Blue Book explaining the TCJA attempted to subject co-op real estate taxes to the limitation but acknowledged “A technical correction may be needed to achieve this result.” This video reviews how Congress addressed this situation and also discusses final regulation SALT workarounds for the TJCA's $10,000 state and local tax deduction limitation.
- Managing director in the CBIZ, Inc. MHM National Tax office
- Monitors federal tax legislation and consults nationally on a broad range of domestic tax services for businesses and individuals, including IRS procedural and controversy matters
- Authored numerous tax articles, edits all of the CBIZ MHM thought leadership articles, and lectures on a broad range of tax topics across the country
- Co-presents a business tax update every quarter entitled Eye on Washington
- Frequently quoted in nationally recognized publications including the Wall Street Journal, New York Times, Barron’s and the Washington Post, as an authority on tax topics and professional ethics; he has been profiled in Forbes, and appeared as a commentator on NPR, CNBC and Fox News and Fox Business
- In 2013, he was selected as a Washington D.C. Power Player by SmartCEO Magazine – one of a dozen lawyers, bankers and accountants selected in the inaugural year of the program’s existence; in 2017 he was honored again by SmartCEO Magazine as a Washington, D.C. Center of Influence
- Having entered through the honors program, he spent the first five years of his career with the Dept. of Justice, Tax Division, trying tax cases on behalf of the United States (including jury trials in federal district court)
- For over 30 consecutive years, he has received the preeminent ranking in legal ability and ethical standards from his peers, the highest rating available, from Martindale Hubbell, a division of Lexis-Nexis
- Graduated with his law degree, magna cum laude, Florida State University College of Law, where he won a National Moot Court Championship and chaired the new membership for the Law Review
- Active member of the California Bar, inactive member of the Florida Bar, and a member of the ABA Tax Section
- Can be contacted at 301-961-1943, [email protected] or @BillSmithTax1
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