“The One Big, Beautiful Mess” Tax Case Study
BEC CFO & CPA
In this video, Kaden Hackney, tax partner at BEC CFO, explains a case study of a high-income client earning $1.5 million in non-business income (like wages, dividends, capital gains, and retirement income). Under the Tax Cuts and Jobs Act, this client could previously offset much of this income with business losses and generous itemized deductions, effectively paying little or no tax.
However, under the new legislation, significant changes have been introduced:
A permanent excess business loss limitation caps deductible business losses to $626,000 annually.
A revamped Section 68 drastically limits itemized deductions once a taxpayer crosses into the 37% top income tax bracket (starting around $578,000 for married filing jointly).
In this example, these combined restrictions reduce deductible amounts from about $960,000 to under $164,000, leaving over $850,000 in taxable income and generating an estimated $216,000 federal tax bill if no proactive planning is done.
Schedule a free consultation with BEC CFO to explore custom tax planning strategies to mitigate the impact of these new tax code provisions.