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AICPA Submits Recommendations on Qualified Business Income Under Section 199A of TCJA

Early last year, Treasury and the IRS issued corrected final regulations (REG-107892-18) on the QBI deduction and subsequent updated Frequently Asked Questions (FAQs) regarding the computation of QBI and instructions to Form 8995, Qualified Business ...

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The American Institute of CPAs (AICPA) submitted recommendations to the Department of the Treasury and the Internal Revenue Service (IRS) to address the need for additional guidance on Section 199A of the Tax Cuts and Jobs Act (TCJA) that focuses, in part, on the qualified business income (QBI) deduction.

Early last year, Treasury and the IRS issued corrected final regulations (REG-107892-18) on the QBI deduction and subsequent updated Frequently Asked Questions (FAQs) regarding the computation of QBI and instructions to Form 8995, Qualified Business Income Deduction Simplified Computation, and Form 8995-A, Qualified Business Income Deduction.

“There are a few areas of the regulations in which taxpayers and tax preparers need guidance that have remained unaddressed. [The AICPA] urges that [Treasury and the IRS] provide additional certainty regarding which deductions are not reductions for QBI,” the letter states. Recommendations address two specific areas:

  • Self-employed deductions
  • Charitable deductions

The AICPA recommends that Treasury and the IRS confirm that various self-employed deductions under sections 164(f), 162(l) and 404 are not automatically reductions of QBI, and update form instructions to reflect the same treatment for a charitable deduction under section 170.