IRS issues Section 199A proposed regulations on 20% deduction for pass-throughs

08 August 2018

The IRS and Treasury have released highly anticipated proposed regulations on the new 20% deduction for pass-through businesses, which was enacted under the Tax Cuts and Jobs Act. The proposed regulations provide guidance on:

— The computation of the Section 199A deduction

— The aggregation of income from multiple sources

— The computation of the amount of W-2 wages and the "unadjusted basis" of qualified property attributable to a trade or business

— The determination of activities treated as excluded specified service trades or businesses

— Anti-abuse rules, including under Section 643

The proposed regulations state that taxpayers may rely on the proposed regulations until final regulations are published. The general anti-abuse provisions of the proposed regulations are proposed to apply retroactively to tax years ending after the date of enactment (December 22, 2017).

Forthcoming are a Tax Alert and a webcast scheduled for Wednesday, August 15 from 12 - 1 p.m. ET, which will provide an analysis of the proposed regulations and how they apply to affected taxpayers. Register here for the webcast.

Document ID: 2018-9019