§199A QBI Deduction on IRS-Prepared Substitute Return Not Allowed

NSTP§199A QBI, Internal Revenue Service (IRS), TCJA

§199A QBI Deduction Not Allowed on IRS-Prepared Substitute Return

§199A QBI Deduction on IRS-Prepared Substitute Return Not Allowed In a memorandum, the IRS's Small Business/Self-Employed (SB/SE) Division has said that it will not allow a §199A QBI (qualified business income) deduction on IRS-prepared substitute returns. Background—substitute return. In general, if a taxpayer fails to file a tax return, the IRS can make the return from its own knowledge and from such information as it can obtain through testimony or otherwise. (Code Sec. 6020(b)(1)) Such a return is commonly referred to as a substitute return. When a delinquent return is secured after a substitute return has been prepared, the IRS will generally examine the taxpayer's records to determine the accuracy of the return unless it is impracticable to do so (based on necessary time, research, etc.) or it is not warranted. (Internal Revenue Manual 4.12.1.9) Background—Sec. 199A QBI deduction. Code Sec. 199A provides a deduction to non-C corporation taxpayers of up to 20% of the taxpayer's QBI from each of the taxpayer's qualified trades or businesses, including those operated through a partnership, S corporation, or sole proprietorship, as well as a deduction of up to 20% of aggregate qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership income. The … Read More