The Tax Cuts and Jobs Act of 2017 created a lucrative new tax incentive for certain business owners: the ability to deduct up to 20% of their qualified business income. Thus, a business owner who qualified for the deduction could earn a taxable income of $500,000 but pay tax on as little as $400,000, resulting in tax savings of nearly $40,000.

Like nearly all provisions of the tax code, however, the deduction is subject to a myriad of exceptions, limitations, and special rules. Among other things, the deduction is reduced or even eliminated depending on the owner’s income, the nature of the business, how the business is organized (the deduction is only available to pass-through businesses such as partnerships, S corporations, and sole proprietorships), how much the business pays in wages, and how much property it uses.

When the deduction was added to the tax code, construction business owners, in particular, faced uncertainty about whether they qualified for the deduction if their income exceeded a specified amount, whether they could combine multiple trades or businesses into a single business (or separate a single business into multiple businesses), and whether income from rental activities qualified for the deduction.  Recent IRS regulations have clarified these and other issues, generally in taxpayer-friendly ways.
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At the CEA’s 98th Annual Clambake on October 24, Hahn Loeser’s Andy Natale was honored by the Construction Employers’ Association (CEA) with its Distinguished Service Award, elevating him to the ranks of the CEA’s Hall of Fame. Andy has devoted his entire career to working in the construction industry, representing general contractors, design/builders, surety companies,

Hahn Loeser attorney Matt Grashoff and Brian Hoagland of Oswald Companies join Tim Linville and Glen Shumate of the Construction Employers Association on this episode of the Construction Employers Podcast to discuss the impact of the Ohio Supreme Court’s decision in the Charles Construction case on construction insurance.

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On July 17, 2019, the Supreme Court of Ohio announced a major victory for the Ohio construction industry in the ongoing battle over whether Ohio’s construction statute of repose, R.C. 2305.131, bars claims for breach of contract as well as tort claims. In New Riegel Local School District v. Buehrer Group Architecture & Engineering, Inc., et al., the Ohio Supreme Court ruled the construction statute of repose does apply to breach-of-contract claims as well as tort claims.

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On March 27, 2019, Home Builders Association of Greater Cleveland President Dean Tompkins and HBA members Josh Edgell and Aaron Evenchik testified in front of Euclid City Council regarding potential residential home construction in the City.  Euclid Councilperson Kristian Jarosz asked the HBA to assist the City in evaluating a 2003 law that required all new residential construction be a minimum of 2,000 square feet.  The City is concerned the law is preventing new development, especially as much of the existing housing stock is less than 2,000 square feet.  HBA members agreed the 2,000 square foot minimum is an impediment to new construction in Euclid.

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On Feb. 1, 2019, the Occupational Safety and Health Review Commission (OSHRC) reversed an OSHA citation issued to Suncor Energy (U.S.A.) Inc., as the controlling employer, for a fall protection violation. In this ruling, the OSHRC found that as a controlling employer, Suncor was not liable for two main reasons. First, it had a robust safety program in place that not only met, but exceeded OSHA’s minimum standards. Second, it had a rigid enforcement program that removed employees from the worksite for a single violation of its fall protection safety procedures. This decision emphasizes that a controlling employer’s safety role is secondary. The OSHRC then concluded that, given the massive scope of the project, Suncor’s robust safety program, and its zealous enforcement efforts, there was insufficient evidence to support a citation.

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On Feb. 28 the Occupational Safety and Health Review Commission (OSHRC) reversed a citation issued to A.H. Sturgill Roofing, Inc. for the heat-related death of an employee, finding that all of the elements of proof of the violation had not been met by the Secretary of Labor. Sturgill’s citation was for a general duty clause violation for exposing its employee “to the hazard of excessive heat from working on a commercial roof in the direct sun.”[i]   In response to this ruling, the way employers defend against heat-related OSHA citations for violations of the general duty clause may change.

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A draft bill provided to the Ohio legislature from Governor Mike DeWine aimed at addressing Ohio’s transportation infrastructure funding problem is in the works. The Ohio Contractors Association is actively promoting awareness of this development to its membership, which includes important information on the bill’s likely impact on the industry.  For full details, click here