Entity Choice Directly Impacts IRS Scrutiny

S-Corps reduce self-employment tax; partnerships offer flexibility; C-Corps can be tax-efficient under certain situations. Entity decisions must align with your income, investments, and family planning.

Real-World Example
An S-Corp owner paid minimal salary with high distributions.

Risk

• IRC §162 reasonable compensation challenge

Benchmarking and Documentation Prevent Reclassification

Strategy Applied

• Specific IRC reference + defensible outcome

Outcome

• IRS challenge avoided

• Payroll tax exposure reduced without audit escalation

You’re affected if you…

Own rental real estate

You’ll need to revisit depreciation schedules, passive activity loss rules, and aggregation elections. Even if you filed a Real Estate Professional Election (REPE) under Rev. Proc. 2019-38, this federal bill may shift how your rental losses are recognized and what you can deduct this year versus future years.

Claim QBI deductions

The Qualified Business Income (QBI) deduction was extended under OBBBA, but the phaseout thresholds and calculation mechanics are still income-sensitive. If you’re married filing jointly with income over $364,200, your eligibility may shrink or vanish—unless you proactively plan entity structure or payroll levels.

Have stock options or business interest expenses

If you hold ISOs, NSOs, or private equity, the new expensing rules and EBITDA-based interest limits can shift your timing strategy. Poor planning can push income into unfavorable tax years, or miss opportunities for capital loss harvesting.

Operate a pass-through entity

LLCs, S Corps, or partnerships may now deduct more up front under expanded §179 expensing rules—but only if you’re coordinated with the latest rules. DIY tax software often can’t distinguish what applies and what doesn’t.

Plan on leaving a legacy

Estate tax thresholds are now permanently higher, but charitable deduction rules also changed. A $1,000 universal deduction sounds nice—but it masks bigger planning shifts around charitable lead trusts and gift exclusions that require foresight and documentation.

Final Thought: This Isn’t Just a Tax Change. It’s a Wealth Strategy Moment.

The Big Beautiful Bill isn’t just legislation—it’s a fork in the road for your financial future. You can try to “do it yourself” and hope for the best… or partner with a seasoned tax strategist who’s been helping Texans like you for two decades.

 Don’t leave money on the table.
 Don’t wait for next April.
 Start your strategy now.

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We offer free 30-minute consultations for Texas taxpayers who want real answers—not rushed returns.

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Lakeline Tax provides tax preparation services for everyone including Individual Tax Preparation, Business Tax Preparation, Self-Employed Tax Preparation, Partnership & Corporate Taxes, Bookkeeping, and Tax Resolution, serving Austin, Cedar Park, Leander, Liberty Hill, and surrounding cities, along with all 50 states. We utilize QuickBooks and are certified QuickBooks ProAdvisors. Get more done with us.