The IRS has proposed regulations concerning the qualified trade or trade income deduction under section 199A, with a guide on calculating W-2 wages along with commonly asked questions for sole proprietorships, partnerships, Trust and S corporations to deduct 20 % of their QBI. The deduction is largely obtainable to tax payers whose 2018 taxable income falls below $315,000 for joint returns and $157,500 for other tax payers.

While addressing variety of subjects, it clearly elaborates the deduction pattern, threshold etc. by introducing various subsections.

Prop. Regs. Section.1.199A-1 contains the rules of procedures or its operations, inclusive as how to regulate the deduction for tax payers with incomes at or below the threshold amounts and for those with income above the thresholds.

Prop. Regs. Sec. 1.199A-2 encloses instructions both for determining W-2 wages and the UBIA of qualified property, which are components in calculating boundaries on the deduction,

Prop. Sec 1. 199A-3 reiterates the explanations in Sec. 199A(c), and also offers further regulations on the determination of QBI, REIT Dividends as well on Qualified PTP income.

Prop. Regs. Sec. 1.199A-4 comprises aggregation rules letting discrete trades or businesses to be assembled when applying the Sec. 199A rules.

Prop. Regs. Sec. 1.199A-5, Give definition on specific service trades or business and the trade or business of performing services as an employee.

For more information and detailed analysis, please visit https://www.journalofaccountancy.com/news/2018/aug/business-income-deduction-irs-regs-201819494.html?utm_source=mnl:cpald&utm_medium=email&utm_campaign=09Aug2018