The Treasury Department issued Final Regulations on January 19, 2019 on one of the most controversial and complicated provisions in the 2017 Tax Cuts and Jobs Act, Section 199A. Section 199A provides up to a 20% deduction for owners of pass-through entities, but the application of the provision is subject to numerous exceptions, limitations and qualifications. Due to a lack of clarity on application of Section 199A, many taxpayers and practitioners have expressed concern over timely and accurately filing 2018 tax returns and led to hundreds of comments from various industry groups. The Final Regulations finalize the Proposed Regulations issued in August of 2018, incorporate many of the 335 comment letters received by the Treasury and answer and address numerous concerns of taxpayers and practitioners. In addition, the Treasury released a Notice contemporaneously with the Final Regulations providing a safe harbor allowing qualification for rental real estate activity where 250 or more hours of “rental services” are performed by the taxpayer with respect to such activity, among other requirements.
The Final Regulations and the Notice can be found at the links below:
If you have any questions on Section 199A or if or how it applies to your business or businesses, please contact your Manning Fulton relationship attorney.