Many real estate investors hoping for clarity on whether they will be eligible for the tax break for pass-through entities under the Tax Cuts and Jobs Act (TCJA) will be disappointed that guidance from the Internal Revenue Service (IRS) will not help much for projects leased on a triple-net basis.

The TCJA created a new Section 199A, which allows a deduction of up to 20% of qualified business income from each of the taxpayer’s qualified trades or business conducted through pass-through entities, such as partnerships, LLCs and subchapter S corporations, or a business held directly by an investor. This can result in a discount of up to 20% on the taxes due on income from a qualified business, assuming all the requirements are satisfied. The deduction applies for tax years beginning in 2018 through 2025.