Sec. 1.199A-0 Table of Contents.
This section lists the section headings that appear in §§1.199A-1 through 1.199A-6.
§1.199A-1 Operational rules.
(a) Overview.
(1) In general.
(2) Usage of term individual.
(b) Definitions.
(1) Aggregated trade or business.
(2) Applicable percentage.
(3) Net capital gain.
(4) Phase-in range.
(5) Qualified business income (QBI).
(6) QBI component.
(7) Qualified PTP income.
(8) Qualified REIT dividends.
(9) Reduction amount.
(10) Relevant passthrough entity (RPE).
(11) Specified service trade or business (SSTB).
(12) Threshold amount.
(13) Total QBI amount.
(14) Trade or business.
(15) Unadjusted basis immediately after the acquisition of qualified property (UBIA of qualified property).
(16) W-2 wages.
(c) Computation of the section 199A deduction for individuals with taxable income not exceeding threshold amount.
(1) In general.
(2) Carryover rules.
(i) Negative total QBI amount.
(ii) Negative combined qualified REIT dividends/qualified PTP income.
(3) Examples.
(d) Computation of the section 199A deduction for individuals with taxable income above the threshold amount.
(1) In general.
(2) QBI component.
(i) SSTB exclusion.
(ii) Aggregated trade or business.
(iii) Netting and carryover.
(A) Netting.
(B) Carryover of negative total QBI amount.
(iv) QBI component calculation.
(A) General rule.
(B) Taxpayers with taxable income within phase-in range.
(3) Qualified REIT dividends/qualified PTP income component.
(i) In general.
(ii) SSTB exclusion.
(iii) Negative combined qualified REIT dividends/qualified PTP income.
(4) Examples.
(e) Special rules.
(1) Effect of deduction.
(2) Disregarded entities.
(3) Self-employment tax and net investment income tax.
(4) Commonwealth of Puerto Rico.
(5) Coordination with alternative minimum tax.
(6) Imposition of accuracy-related penalty on underpayments.
(7) Reduction for income received from cooperatives.
(f) Effective/applicability date.
(1) General rule.
(2) Exception for non-calendar year RPE.
§1.199A-2 Determination of W-2 Wages and unadjusted basis immediately after acquisition of qualified property.
(a) Scope.
(1) In general.
(2) W-2 wages.
(3) UBIA of qualified property.
(i) In general.
(ii) UBIA of qualified property held by a partnership.
(iii) UBIA of qualified property held by an S corporation.
(iv) UBIA and section 743(b) basis adjustments.
(A) In general.
(B) Excess section 743(b) basis adjustments.
(C) Computation of partner’s share of UBIA with excess section 734(b) basis adjustments.
(D) Examples.
(b) W-2 Wages.
(1) In general.
(2) Definition of W-2 Wages.
(i) In general.
(ii) Wages paid by a person other than a common law employer.
(iii) Requirement that wages must be reported on return filed with the Social Security Administration.
(A) In general.
(B) Corrected return filed to correct a return that was filed within 60 days of the due date.
(C) Corrected return filed to correct a return that was filed later than 60 days after the due date.
(iv) Methods for calculating W-2 wages.
(A) In general.
(B) Acquisition or disposition of a trade or business.
(1) In general.
(2) Acquisition or disposition.
(C) Application in the case of a person with a short taxable year.
(1) In general.
(2) Short taxable year that does not include December 31.
(D) Remuneration paid for services performed in the Commonwealth of Puerto Rico.
(3) Allocation of wages to trades or businesses.
(4) Allocation of wages to QBI.
(5) Non-duplication rule.
(c) UBIA of qualified property.
(1) Qualified property.
(i) In general.
(ii) Improvements to qualified property.
(iii) Adjustments under sections 734(b) and 743(b).
(iv) Property acquired at end of year.
(2) Depreciable period.
(i) In general.
(ii) Additional first-year depreciation under section 168.
(iii) Qualified property acquired in transactions subject to section 1031 or section 1033.
(A) Replacement property received in a section 1031 or 1033 transaction.
(B) Other property received in a section 1031 or 1033 transaction.
(iv) Qualified property acquired in transactions subject to section 168(i)(7)(B).
(v) Excess section 743(b) basis adjustment.
(3) Unadjusted basis immediately after acquisition.
(i) In general.
(ii) Qualified property acquired in a like-kind exchange.
(A) In general.
(B) Excess boot.
(iii) Qualified property acquired pursuant to an involuntary conversion.
(A) In general.
(B) Excess boot.
(iv) Qualified property acquired in transactions described in section 168(i)(7)(B).
(v) Qualified property acquired from a decedent.
(vi) Property acquired in a nonrecognition transaction with principal purpose of increasing UBIA.
(4) Examples.
(d) Effective/applicability date.
(1) General rule.
(2) Exceptions.
(i) Anti-abuse rules.
(ii) Non-calendar year RPE.
§1.199A-3 Qualified business income, qualified REIT dividends, and qualified PTP income.
(a) In general.
(b) Definition of qualified business income.
(1) In general.
(i) Section 751 gain.
(ii) Guaranteed payments for the use of capital.
(iii) Section 481 adjustments.
(iv) Previously disallowed losses.
(A) In general.
(B) Partial allowance.
(C) Attributes of disallowed loss determined in year loss is incurred.
(1) In general.
(2) Specified service trades or businesses.
(D) Examples.
(v) Net operating losses.
(vi) Other deductions.
(2) Qualified items of income, gain, deduction, and loss.
(i) In general.
(ii) Items not taken into account.
(3) Commonwealth of Puerto Rico.
(4) Wages.
(5) Allocation of items among directly-conducted trades or businesses.
(c) Qualified REIT dividends and qualified PTP income.
(1) In general.
(2) Qualified REIT dividend.
(3) Qualified PTP income.
(i) In general.
(ii) Special rules.
(d) Section 199A dividends paid by a regulated investment company.
(1) In general.
(2) Definition of section 199A dividend.
(i) In general.
(ii) Reduction in the case of excess reported amounts.
(iii) Allocation of excess reported amount.
(A) In general.
(B) Special rule for noncalendar-year RICs.
(3) Definitions.
(i) Reported section 199A dividend amount.
(ii) Excess reported amount.
(iii) Aggregate reported amount.
(iv) Post-December reported amount.
(v) Qualified REIT dividend income.
(4) Treatment of section 199A dividends by shareholders.
(i) In general.
(ii) Holding period.
(5) Example.
(e) Effective/applicability date.
(1) General rule.
(2) Exceptions.
(i) Anti-abuse rules.
(ii) Non-calendar year RPE.
(iii) Previously disallowed losses.
(iv) Section 199A dividends.
§1.199A-4 Aggregation.
(a) Scope and purpose.
(b) Aggregation rules.
(1) General rule.
(2) Operating rules.
(i) Individuals.
(ii) RPEs.
(c) Reporting and consistency.
(1) For individual.
(2) Individual disclosure.
(i) Required annual disclosure.
(ii) Failure to disclose.
(3) For RPEs.
(i) Required annual disclosure.
(ii) Failure to disclose.
(d) Examples.
(e) Effective/applicability date.
(1) General rule.
(2) Exception for non-calendar year RPE.
§1.199A-5 Specified service trades or businesses and the trade or business of performing services as an employee.
(a) Scope and effect.
(1) Scope.
(2) Effect of being an SSTB.
(3) Trade or business of performing services as an employee.
(b) Definition of specified service trade or business.
(1) Listed SSTBs.
(2) Additional rules for applying section 199A(d)(2) and paragraph (b) of this section.
(i) In general.
(A) No effect on other tax rules.
(B) Hedging transactions.
(ii) Meaning of services performed in the field of health.
(iii) Meaning of services performed in the field of law.
(iv) Meaning of services performed in the field of accounting.
(v) Meaning of services performed in the field of actuarial science.
(vi) Meaning of services performed in the field of performing arts.
(vii) Meaning of services performed in the field of consulting.
(viii) Meaning of services performed in the field of athletics.
(ix) Meaning of services performed in the field of financial services.
(x) Meaning of services performed in the field of brokerage services.
(xi) Meaning of the provision of services in investing and investment management.
(xii) Meaning of the provision of services in trading.
(xiii) Meaning of the provision of services in dealing.
(A) Dealing in securities.
(B) Dealing in commodities.
(1) Qualified active sale.
(2) Active conduct of a commodities business.
(3) Directly holds commodities as inventory or similar property.
(4) Directly incurs substantial expenses in the ordinary course.
(5) Significant activities for purposes of paragraph (b)(2)(xiii)(B)(4)(iii)
(C) Dealing in partnership interests.
(xiv) Meaning of trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners.
(3) Examples.
(c) Special rules.
(1) De minimis rule.
(i) Gross receipts of $25 million or less.
(ii) Gross receipts of greater than $25 million.
(2) Services or property provided to an SSTB.
(i) In general.
(ii) 50 percent or more common ownership
(iii) Examples.
(d) Trade or business of performing services as an employee.
(1) In general.
(2) Employer’s Federal employment tax classification of employee immaterial.
(3) Presumption that former employees are still employees.
(i) Presumption.
(ii) Rebuttal of presumption.
(iii) Examples.
(e) Effective/applicability date.
(1) General rule.
(2) Exceptions.
(i) Anti-abuse rules.
(ii) Non-calendar year RPE.
§1.199A-6 Relevant passthrough entities (RPEs), publicly traded partnerships (PTPs), trusts, and estates.
(a) Overview.
(b) Computational and reporting rules for RPEs.
(1) In general.
(2) Computational rules.
(3) Reporting rules for RPEs.
(i) Trade or business directly engaged in.
(ii) Other items.
(iii) Failure to report information.
(c) Computational and reporting rules for PTPs.
(1) Computational rules.
(2) Reporting rules.
(d) Application to trusts, estates, and beneficiaries.
(1) In general.
(2) Grantor trusts.
(3) Non-grantor trusts and estates.
(i) Calculation at entity level.
(ii) Allocation among trust or estate and beneficiaries.
(iii) Separate shares.
(iv) Threshold amount.
(v) Charitable remainder trusts.
(vi) Electing small business trusts.
(vii) Anti-abuse rule for creation of a trust to avoid exceeding the threshold amount.
(viii) Example.
(e) Effective/applicability date.
(1) General rule.
(2) Exceptions.
(i) Anti-abuse rules.
(ii) Non-calendar year RPE.
(iii) Separate shares.
(iv) Charitable remainder trusts.
[Added by T.D. 9847, 84 FR 2952-3014, Feb. 8, 2019; corrected at 84 FR 15954-15955, Apr. 17, 2019; amended by T.D. 9899, 85 FR 38060-38068, June 25, 2020.]
