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Morgan Klinzing, an associate in the Tax and Estates Practice Group of Pepper Hamilton, was quoted in the February 14, 2019 Tax Notes article, "Tiered Partnerships May Provide Little-Known 199A Benefit."
In the tiered partnership context, Morgan Klinzing of Pepper Hamilton LLP said it seems possible to flow qualified business income through an upper-tier partnership that is an SSTB to the ultimate owners without tainting that income. She pointed to the language in the final regulations on what passthrough entities must report about their income to their partners.
For example, a partnership would have to report on its Schedule K-1 the qualified income, wages, and basis from a trade or business and then determine whether that business is an SSTB — and it would have to report that information for any relevant passthrough entity in which it owns a direct or indirect interest, Klinzing noted. "It implies that this will pass through on line 20 of your Schedule K-1, and you'd report each business separately," Klinzing said.
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