Watch out for this new tax bill!

Watch out for this new tax bill! It passed Congress last week and will go to the Senate after the break. It's expected to pass there quickly as well.If you have an S Corporation, please pay special attention!
 
if the Bill, called the American Jobs and Close Tax Loopholes Act of 2010, passes the Senate, it will take affect January 1, 2011.

If you:

• Have an S Corporation,
• Are involved in professional services if substantially all of the activities of such trade or business involve providing services in the fields of health, law, lobbying, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, investment advice or management, or brokerage services, and
• Have three or fewer shareholders whose 'reputation and expertise' is used in the business.

You will have to pay self-employment tax (15.3%) on any distributions received from the S Corporation.

There are more questions than answers right now. For example:

• What is the definition of professional services?
• What is the brightline definition of "reputation and expertise" ?
• How will this apply to LLCs that are manager-managed? 

Stay tuned. We'll keep you posted.