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June 24, 2020

IRS issues final regulations under IRC Section 199A on treatment of previously suspended losses and determining deductions for RICs and certain trusts

The IRS has issued final regulations (TD 9899) regarding the qualified business income (QBI) deduction under IRC Section 199A, affecting certain individuals, partnerships, S corporations, trusts and estates. Finalizing proposed regulations issued in January 2019 (REG-134652-18; see Tax Alert 2019-0218), these new rules provide guidance on (1) the treatment of previously suspended losses included in QBI; and (2) determining the IRC Section 199A deduction for taxpayers holding interests in regulated investment companies (RICs), split-interest trusts and charitable remainder trusts. The final regulations are effective on August 24, 2020,  but taxpayers may continue to rely on the proposed regulations for tax years beginning on or before this date. A Tax Alert is forthcoming.