IRS expands §199A FAQs. The IRS has published an updated set of frequently asked questions (FAQs) on their website related to the §199A qualified business income deduction. The April 11, 2019 update expanded the FAQ from 12 questions to 33 and saved what many will see as the bombshell for the last question. Many of the answers will not be surprising at all to most practitioners. One will likely cause some who had elected to use the proposed regulations to question whether that accomplished what they though it did, but the IRS position is one that many commentators had already suggested might be the position. And one update may affect a large number of taxpayers, as the author of the FAQ has written that the language of §199A(c)(3)(A) allows the IRS to force a double deduction for an S corporation shareholder’s self-employed health insurance deduction. The most surprising answer for many is found in question and answer 33, which provides: Q33. Health insurance premiums paid by an S-Corporation for greater than 2% shareholders reduce qualified business income (QBI) at the entity level by reducing the ordinary income used to compute allocable QBI. If I take the self-employed health insurance deduction … Read More
The Treasury Department and the IRS have released on IRS.gov the corrected draft final regulations under section 199A (section 199A final regulations) on the new qualified business income (QBI) deduction (section 199A deduction). These corrections include, among other edits, corrections to the definition and computation of excess section 743(b) basis adjustments for purposes of determining the unadjusted basis immediately after an acquisition of qualified property, as well as corrections to the description of an entity disregarded as separate from its owner for purposes of section 199A and §§1.199A-1 through 1.199A-6. The corrected draft has been submitted to the Federal Register for publication.