The Tax Cuts and Jobs Act of 2017 (Tax Act) got a lot of press during negotiations and passage, but there are particular aspects of the law that are worth a deeper dive. One such aspect of the law is the 20-percent deduction in Section 199A intended to benefit pass-through entities. The deduction is much-discussed in the circles that discuss such things, and perhaps the reader has referred clients to the deduction as a benefit worth pursuing. But this article intends to discuss the deduction in the context of health care, where the news is not so good.

The early headlines surrounding the Tax Act focused heavily on the tax rate change for non-pass-through corporations (i.e., “Subchapter C corporations,” so named because the general rules governing such entities are codified at Subchapter C of Chapter 1 of the Internal Revenue Code; see, e.g., 26 U.S.C.A. Section 301) from a progressive rate scheme (and, in the case of personal services corporations, a flat 35 percent) to a flat 21 percent. Though widely welcomed by the business community, that rate change meant little to the pass-through entities.