The Treasury Department issued guidance this week on a key part of President Trump Donald John TrumpSteele Dossier sub-source was subject of FBI counterintelligence probe Pelosi slams Trump executive order on pre-existing conditions: It 'isn't worth the paper it's signed on' Trump 'no longer angry' at Romney because of Supreme Court stance MORE’s 2017 tax cuts. It was good news for some business owners and a setback for others.

The proposed rules issued by the Treasury Department and the IRS on Wednesday clarify aspects of the tax law’s 20-percent deduction for income of noncorporate businesses known as “pass-throughs.” The deduction is claimed by owners of pass-throughs on their individual tax returns.

The new rules narrowly define one of the restrictions on the deduction. As a result, more high-earning business owners will be eligible for it than many tax experts had expected.

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At the same time, the rules squelch certain tax-planning strategies that the Treasury Department views as improper — strategies that some taxpayers were examining as a way to potentially take advantage of the deduction.

Here are some of the winners and losers from the new guidance.

Winners

Real estate agents

The real estate industry is a big winner under the GOP tax law, and the sector comes out on top in the new guidance as well.

The tax law restricts the deduction for high-earning owners of brokerage firms, but the guidance says that real-estate agents and brokers aren’t included in that restriction.

Similarly, the tax law restricts the deduction for high-earning owners of investment-management firms, while the new guidance says that directly managing real estate is not considered investment management.

Bankers

Since the tax law restricts the deduction for financial-services business, there were questions about whether high earners who own banks organized as pass-throughs would be eligible for the deduction.

That question was answered with the new guidance, which says banking is not included in the financial-services category. Instead, the category is limited to services typically performed by investment bankers and financial advisers, and the guidance says financial services doesn’t include taking deposits and making loans.

Chefs, web designers, electricians and plumbers

Before the guidance was issued, there was a lot of uncertainty about what fell into the catch-all category of businesses for which the deduction is restricted for high earners. Some in the tax community thought the catch-all category would apply to owners such as chefs, web designers, electricians and plumbers.

Under the 2017 tax law, married couples that make more than $415,000 a year are ineligible for the deduction when their pass-through business income comes from a “specified service trade or business.” The law stipulates several categories of businesses that are considered specified businesses. It also provides that specified businesses are those that fall into the catch-all category of businesses whose principal asset is the “reputation or skill” of its employees or owners.

But the Treasury Department and the IRS said the only businesses that are based on the “reputation or skill” of their owners are ones that leverage the fame or skill of the owner to collect appearance fees, endorse products or license the owner’s name. That narrow definition means a lot of business owners will be able to take the deduction.

The rules even provide an example that explains how a “well-known chef” can benefit from the deduction. In the scenario, the chef can’t claim the deduction for endorsement fees but can claim it for restaurant income.

Owners of multiple related pass-throughs

One of the top requests businesses had for the Treasury Department and the IRS was for the agencies to allow owners of multiple, connected entities to aggregate them when calculating the deduction.

It’s not uncommon for a taxpayer to have businesses comprised of multiple entities, and those owners were worried that they wouldn’t qualify for the deduction if income had to be calculated on a per-entity basis.

The guidance allows aggregation, pleasing groups such as the U.S. Chamber of Commerce. A senior Treasury official said that if the agency didn’t allow aggregation, many businesses would feel the need to restructure purely for tax purposes.

Losers

Lawyers and patient-seeing doctors

The tax law states that health companies and law firms are service businesses whose high-income owners don’t qualify for the deduction. The guidance emphasized that by saying high-earning lawyers and high-earning doctors who provide direct medical services to patients can’t claim the tax break.

Some stakeholders in the legal and health fields had been hoping to take advantage of the pass-through deduction by moving their administrative functions into a separate business entity. But the proposed rules took aim at that strategy, known as “cracking.”

Lobbyists

Many lobbyists are probably pleased with the guidance, mainly because it allows more of their clients to benefit from the deduction than previously expected.

However, high-earning owners of lobbying firms won’t be able to take the deduction on their tax returns. High earners with income from consulting firms can’t take the deduction under the tax law, and the the guidance defines consulting to include lobbying.

Employees who wanted to become independent contractors

Under the tax law, wage income earned by employees isn’t eligible for the pass-through deduction. One way workers might have been able to try to take advantage of the deduction would have been to reclassify themselves as independent contractors of their companies.

But the Treasury Department’s proposed rules prevent taxpayers from doing that. The rules presume that former employees of a company who then are treated as independent contractors of the same company are still employees who can’t claim the deduction.

Unclear

President Trump

It’s difficult to measure how much Trump is personally helped or hurt by the regulations, compared to other possible regulatory interpretations. That’s because Trump hasn’t been transparent about his finances, experts said.

Trump became the first president in decades to refuse to release his tax returns, so it’s not completely clear how he earns his income from his business ventures.

However, tax experts said Trump will probably get some benefit from the deduction. While he has a lot of licensing deals — income that won’t be eligible for the deduction — the proposed rules appear to allow someone in his position to deduct income from other sources, such as real estate.