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Individual Tax

IRS will change Form 1040, etc. instructions to reflect new Sec. 199A regs

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

IRS website—Instructional changes do to issuance of final regs for Qualified Business Income Deduction

On its website, IRS has announced that the instructions for 2018 Form 1040 and for 2018 pass-through entity returns will soon be updated to reflect changes that need to be made as a result of recently issued regs on the Code Sec. 199A qualified business income deduction.

Background—qualified business income deduction.  Congress enacted Code Sec. 199A to provide a deduction to non-corporate taxpayers of up to 20% of the taxpayer’s qualified business income from each of the taxpayer’s qualified trades or businesses, including those operated through a partnership, S corporation, or sole proprietorship, as well as a deduction of up to 20% of aggregate qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership income.

Earlier this month, IRS issued final regs under Code Sec. 199A. See, for example,  IRS issues final Sec. 199A qualified business income deduction regs.

IRS will need to change form instructions.  Noting that the new regs contain reporting language that is different from what is found in some 2018 revisions of instructions that were recently posted to IRS.gov, IRS has announced that instructions for the following forms are being revised to reflect the reporting language found in the regs and will be re-posted to IRS.gov shortly: Form 1040, Form 1065 Schedule K-1, Form 1120-S, Form 1120-S Schedule K-1, Form 1041 and Form 1041 Schedule K-1.

References: For the Code Sec. 199A deduction, see FTC 2d/FIN ¶L-4305 et seq; United States Tax Reporter ¶199A4.

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