Old 199 and 199A - Fiscal Year K-1

[TimElevation]

Hi

I have a client that received an estate fiscal year 10/31/18 K-1 with the old 199 QPAI and wages info on it. I read in the article below that these individuals can technically take both old 199 and 199A. . Has anyone run into this situation? If so, what did you do? Could there be a technical correction with this loophole? Any insight is appreciated.

If you haven't run into this, what would you do?

https://www.cbiz.com/insights-resources/details/articleid/7038/double-dip-on-dpad-and-section-199a-for-your-2017-fiscal-year-article

 

 

[DANRVAN]

The discussion draft of the "Tax Technical and Clerical Corrections Act" released in January contains a provision that eliminates a duel deduction for both DPAD and 199A.

[TimElevation]

Thank you. This is just a discussion draft and not law, correct?

from my link

It is worth noting, however, that the Joint Committee on Taxation's Congressional Blue Book takes a contrary viewpoint to the IRS's Form 1040 instructions when it comes to the ability to take both the DPAD and the QBI deduction. The IRS indicated in informal phone conversations that it has taken its position due to the way the original transition rule for the DPAD operated back in 2005. In 2005, individuals were not allowed a DPAD deduction for a fiscal year that began in 2004 and ended in 2005. The allowance of the full DPAD in 2018 is to balance out that original rule. The positions in the Congressional Blue are not  binding to the IRS, and to date, the IRS maintains its viewpoint that both of these deductions apply in 2018.

[DANRVAN]

3 hours ago, TimElevation said:

This is just a discussion draft and not law, correct?

Right.  But even though act has stalled out, it shows congress is aware of the oversight which allows two deductions for the same transaction.  

It might someday become law and amended returns might be in order for those who choose to take them both.