Employee Benefits Blog

Posts tagged 199A

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The IRS Puts the Finishing Touches on the 20% Deduction

Final Section 199A Regulations

While most of the government was shut down, parts of the Treasury Department, including IRS personnel responsible for implementing late December 2017’s Tax Cuts and Jobs Act (TCJA), remained open. One of the most significant features and largest potential benefits in the TCJA for business owners is its introduction of Internal Revenue Code Section 199A, commonly referred to as the 20% qualified business deduction or QBI deduction. This deduction is temporary and applicable to years after December 31, 2017 and before January 1, 2026. A few days ago (and just in time for tax return filing season), the IRS provided final regulations and some related material explaining how to implement this deduction. The purpose of this article is to highlight specific features in the final regulations, relative to proposed regulations that were issued in August.

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A Win for Rental Real Estate – Section 199A Deduction Safe Harbor

(An Explanation of IRS Notice 2019-07)

This month as final regulations were issued under Internal Revenue Code Section §199A, the IRS also issued a proposed revenue procedure that provides a “safe harbor” method of treating certain rental activity as a trade or business for purposes of §199A. Notice 2019-07 comes as a relief to many taxpayers who own real estate and were questioning whether they could benefit from the Section 199A deduction this tax season.

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Proposed Section 199A Regulations are Issued

(The IRS Attempts to Explain the 20% Pass-Through Deduction)

One of the most wide-reaching features of December’s Tax Cuts and Jobs Act is the entirely new deduction under Internal Revenue Code Sec. 199A that provides a deduction equal to 20% of certain “pass-through” business income. However, as welcome as the new rule was, Congress rolled out ill-defined terminology and computational ambiguities that left even the most experienced practitioners with numerous questions. This was especially frustrating, because the concept itself of this new deduction is straightforward.

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New Proposed Regulations addressing Section 199A’s new 20% deduction of certain pass-through income

Today the Treasury Department released proposed regulations intended to clarify Section 199A of the Internal Revenue Code. This section of law was introduced by December’s Tax Cuts and Jobs Act, and created a completely new, 20% deduction of certain pass-through and other “business” income. It also created numerous, significant questions regarding qualification for the new deduction.

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New Guidance on Sec. 199A’s 20% flow-through deduction will be available any day

The new 20% deduction applicable to certain flow-through income is one of the most significant features of last December’s Tax Cuts and Jobs Act. As explained in a January BNN article, the text of this new rule, provided in new Internal Revenue Code Section 199A, is complex and often ambiguous. We have been awaiting promised guidance in the form of Treasury Regulations, and it now appears that the release of that guidance is imminent.