On Jan. 18, the Treasury Department and the Internal Revenue Service issued final regulations and three related pieces of guidance implementing the new qualified business income deduction (also known as the section 199A deduction). The new 20 percent deduction for pass-through entities was created by the ABC-supported Tax Cuts and Jobs Act.
According to an IRS new release, the deduction is available for tax years beginning after Dec. 31, 2017. Eligible taxpayers can claim it for the first time on the 2018 federal income tax return they file this year. For more information, read Forbes’ analysis.
ABC released a statement through the Parity for Main Street Employers coalition stating that while the final rules provide some additional clarity, section 199A should be amended to be broader, simpler and permanent in order to maximize tax reform’s impact.
ABC submitted comments when the regulations were first proposed calling the new deduction for qualified business income the most important provision in the TCJA for ABC members, as the overwhelming majority of construction businesses are organized as pass-through entities. Therefore, it is crucial that Treasury and IRS get these rules right and allow this deduction to apply simply and fairly to the Main Street employers Congress intended the provision to benefit.