Would I receive a tax benefit in 2018 if I convert my farm where I rent land into an LLC?

by Kurtis L. Groff, CPA | Feb 27, 2018

I own a small farm and receive income from renting the land. Currently this farm is in a revocable trust. Would I receive tax benefit in 2018 by creating an LLC owned by the trust, capitalizing on the new 20 percent tax benefit?

The 20 percent business deduction has many nuances to it. Rental is one of them. You do not need an activity to be in an entity to qualify for the 20 percent deduction in 2018, but we are awaiting clarifying regulations from Congress regarding how rentals will be treated for the 20 percent deduction.

More needs to be known about the revocable trust arrangement before insight can be given on creating an LLC owned by the trust. I encourage you to consult a professional in person with those details.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Kurtis L. Groff, CPA, is a partner with Simon Lever LLP in Lititz, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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