This limitation initially spurred a burst of creative tax planning, as accountants weighed different methods to help entrepreneurs qualify.
The IRS responded this summer with a crackdown on certain strategies, including “crack and pack,” a tactic in which an otherwise ineligible business splits itself in two so that one entity can take the deduction.
Some uncertainty still remains over defining a trade or business within the context of the legislation, particularly with real estate, said Jeffrey Levine, CPA and CEO of BluePrint Wealth Alliance
For instance, if someone owns a building, but the tenant agrees to pay all real estate taxes, insurance and maintenance on the property, does the owner have the right to take the 20 percent deduction?
That’s not immediately clear, but it’s unlikely that that will deter filers from nabbing the break, said Levine.
“This is an area where people will be aggressive claiming the deduction,” he said.