- April 10, 2020
- Tracy Tasch
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AICPA Asks for More QBI Deduction Guidance
The American Institute of CPAs (AICPA) has requested additional guidance on tax reform’s Code Sec. 199A qualified business income (QBI) deduction.
199A Deduction Guidance
The
IRS issued final and proposed regulations in February 2019 on the Code
Sec. 199A QBI deduction enacted in 2017 under the Tax Cuts and Jobs Act
(TCJA) ( P.L. 115-97). Additionally, the IRS later issued Frequently
Asked Questions (FAQs) on the computation of QBI
and instructions to Form 8995, Qualified Business Income Deduction
Simplified Computation, and Form 8995-A, Qualified Business Income
Deduction.
However, taxpayers and practitioners need additional related guidance, according to the AICPA. “We urge that you provide additional certainty regarding which deductions are not reductions for QBI,” the AICPA wrote in a March 4 letter addressed to David Kautter, Treasury’s assistant secretary for tax policy, and Michael J. Desmond, IRS chief counsel. The letter was released by AICPA on March 6.
In brief, the AICPA recommends that Treasury and the IRS confirm that the deductible portion of self-employment tax under Code Sec. 164(f), the deduction for self-employed health insurance under Code Sec. 162(l), and the deduction for contributions to qualified retirement plans under Code Sec. 404 are not automatically reductions of QBI. Additionally, it recommends that the IRS update form instructions to reflect the same treatment for a charitable deduction under Code Sec. 170.
199A Rules Under Review
Meanwhile, the
White House’s Office of Information and Regulatory Affairs (OIRA) is
currently reviewing Code Sec. 199A rules as related to guidance on
computations for shareholders of real estate investment trusts (REIT).
OIRA received the rules from Treasury on March 5, according to its
website.