Harborview Design LLC is closing out a 2026 projection for its California resident owners filing MFJ, and the numbers are already on the table. Wages are $220,000, Schedule E K-1 QBI is $180,000, and AGI before deductions is $400,000. Itemized inputs include California income tax of $28,000, property tax of $14,000, mortgage interest of $16,000, and charitable contributions of $6,000, and there are two qualifying children. The immediate business need is deciding which 2026 planning priorities actually move federal taxable income and credits under P.L. 119-21, because the wrong priority list wastes time and can lock in the wrong elections and substantiation.
Before we run numbers, we need one decision that controls the rest of the workpaper. Are we treating a 2026 item as a permanent rule we can build into multi year projections, or as a temporary rule where the expiration date is part of the analysis and memo. This is where P.L. 119-21 functions as the change document, and the Internal Revenue Code sections are where we anchor the computations and form mapping.
A practical way to map 2026 is to tie each client facing question to the IRC section that determines it. Individual rate brackets are in IRC §1, itemized deductions and the standard deduction framework are in IRC §63, the SALT limitation framework ties to IRC §§68 and 164, the Child Tax Credit is in IRC §24, the qualified business income deduction is in IRC §199A, the estate and gift exemption amount ties to IRC §2010, bonus depreciation is in IRC §168(k), and recovery of research and experimental expenditures is in IRC §174. P.L. 119-21 extends and modifies several TCJA era rules that were otherwise changing after 2025, so this mapping step prevents us from citing the right concept but the wrong controlling section in the planning memo.
The permanent versus temporary question is not just labeling, because it changes what we document. P.L. 119-21 makes permanent several individual and business provisions that had been scheduled to expire, while also creating temporary items such as the higher SALT cap that applies for a limited window and then resets, and new deductions enacted in the law such as deductions for tip income, qualified overtime pay, and certain car loan interest. The rule we apply in 2026 is therefore the IRC section as amended by P.L. 119-21, with the effective date and any sunset treated as part of the rule statement in the memo. Review the timing at a high level here:
With the authorities mapped, the next decision is what we are producing for the file, because planning conclusions are only as strong as the workpapers and substantiation behind them. For a 2026 individual return with pass through activity, we typically need an annotated organizer that captures the facts that drive each limitation, computation workpapers that show the math and reconcile to the return, and a planning memo that states the conclusion and cites the controlling IRC section as amended by P.L. 119-21. The consequence of skipping this step is predictable. SALT gets capped incorrectly, §199A gets computed without the right wage or income limitation support, depreciation elections are made without a basis and placed in service trail, and the file cannot explain why the 2026 result differs from an earlier projection.
For Harborview, the organizer needs to highlight the facts that directly connect to the 2026 changes. That includes the split between wages and pass through income, state income tax and property tax paid, mortgage interest, charitable giving, and the two qualifying children, all of which feed either itemized deductions, credits, or §199A. The planning memo needs to include year specific figures for 2026 that come from the 2026 forms and instructions, because inflation adjusted amounts and thresholds cannot be carried forward from another year. The workpaper should clearly mark which figures are sourced from taxpayer records, which are computed, and which are pulled from IRS instructions for the 2026 tax year. Sort the file contents into the buckets that keep computations, elections, and substantiation from getting mixed: