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Prop. regs. and notice guide co-ops and patrons on Sec. 199A(g) and QBI deductions

The IRS issued proposed regulations (REG-118425-18) providing rules for patrons of specified agricultural or horticultural cooperatives to calculate their Sec. 199A(a) deduction for qualified business income (QBI) and its reduction required by Sec. 199A(b)(7) by the lesser of (1) 9% of QBI with respect to the patron's trade or business that is allocable to qualified payments from the cooperative, or (2) 50% of W-2 wages with respect to the trade or business so allocable. At the same time, the IRS issued Notice 2019-27 providing methods by which specified cooperatives may calculate W-2 wages for purposes of the Sec. 199A(g) deduction. The Sec. 199A(g) deduction is substantially similar to the former Sec. 199 domestic production activities deduction, which was otherwise repealed by the law known as the Tax Cuts and Jobs Act, P.L. 115-97.

CAP applicants sought

In News Release IR-2019-113, the IRS invited statements of interest from publicly traded corporate taxpayers to participate in its Compliance Assurance Process (CAP), which through "open, cooperative, and transparent interactions" seeks to resolve issues before a return is filed. The program began in 2005 but has not accepted new applicants since 2015. Eligible corporations must have assets of $10 million or more, be U.S. publicly traded C corporations required to submit certain financial statements to the SEC, and not be under investigation or in litigation with the IRS or other government agency that would impede access to current corporate tax records. Additional restrictions apply to corporations currently under examination.

Puerto Rico gets 2 more opportunity zones

In Notice 2019-42, the IRS stated that Treasury had designated two census tracts in Puerto Rico in addition to those it previously identified (in Notice 2018-48) as qualified opportunity zones under Sec. 1400Z-1(b)(3).

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