The Internal Revenue Service is proposing amendments to section 199A. This section provides a deduction up to 20 percent of business income from a business or trade in a domestic United States market. Proposed regulations seeks to provide anti-avoidance, computational, and definitive guidance towards the application of a qualified business income deduction. The proposed regulations will impact engaged participants in domestic businesses and trades including individuals, partnerships, S corporations, trusts and estates. Also included is an anti-avoidance rule, to allow in certain cases to treat multiple trusts as a single trust. Several new sections are added which include:
- Operational Rules – defined terms, computational rules, carryover loss rules, special rules
- Determination of W-2 Wages and the UBIA of Qualified Property – W2 rules attributed to a Trade or Business, Qualified Property, General Definition of Qualified Property, Partnership Special Basis Adjustments, Property Transferred with purpose to Section 199A, Like-Kind Exchanges, Other Transactions, Re-determination of UBI ( and Subsequent Improvements to Qualified Property, Allocation of UBI of Qualified Property RPE’s
- Proposed QBI, Qualified REIT Dividends, Qualified PTP Income – Treatment of Section 751 Gain, Guaranteed Payments For The Use of Capital, Section 481 Adjustments, Previously Suspended Losses, Net Operating Loses, Requirement Of Relatedness to U.S. Trade or Business, Summery of Rules for Determining Relation to U.S. Trade or Business, Exclusion from QBI for certain items, Allocation of Items Not Clarified,
- Aggregation Rules
- Specified Service Trade or Business (SSTB) and the Trade or Business of Performing Services as an Employee – Effect of Being an SSTB, Definition of SSTB,
- Special Rules for RPEs, PTPs, Trusts and Estates – Computational Steps for RPEs and PTPs, Application to Trusts, Estates, and Beneficiaries
- Proposed Anti-Avoidance Rules for Multiple Trusts
- Specified Agricultural or Horticultural Cooperatives
Comments that will be of high interest include the following:
- The utility of proposed collection of information.
- The accuracy of the associated collection of information.
- How the collected information can be increased in clarity, quality, and utility.
- Estimates to the amounts of capital required, costs of operation, and start-up costs.
- Other costs of interest would be of maintenance, and purchase of services to provide information.
- How compliance burden of information collection may be minimized through technology, or automated information collection techniques.
Alternative actions were denied as leaving out the specifications would result in inefficient tax policy decisions in the future. The definitions will help future tax policy decisions be more accurate.
Entrepreneurs could benefit as the Qualified Business Income Deduction can be used by Individuals, Sole Proprietorships, Partnerships, and S – Corporations.
Accounting and tax regulations help accountants and tax professionals by increasing costs for automated softwares and increasing the need of consultations with experience tax law professionals.
Business Owners should often consult with their accountant to make sure their company is receiving all proper tax deductions and abiding by all tax regulations.
Regulation Regular comments on actions of government agencies with an explanation and examination for stratagem or opportunity.
In an effort to find opportunity for entrepreneurial and investment efforts, I have begun to monitor more actions from governmental agencies regarding regulations. This segment aims to highlight interesting developments in the business environment including competitors, regulations, or interesting occurrences.
THIS IS NOT LEGAL ADVICE. THIS IS COMMENTARY ON REGULATION.
Regulations can be a source of opportunity, as they make a major part in the determination of barriers to entry. An industry or practice is difficult to enter if there is a significant amount of regulative procedures and requirements, versus when restrictions are removed an opportunity may be presented. In this way we are doing our small part to encourage an informed people.
We start from modest beginnings but continue to identify, develop, and research opportunity and strategy for entrepreneurs, to better develop business ideas.