IRS Issues Proposed Regulations on Pass-Through Deduction: Proposed Regulations Would Implement Several Anti-Abuse Rules and Provide Computational and Definitional Guidance

Sullivan & Cromwell LLP - August 20, 2018
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On August 8, the Internal Revenue Service and the Treasury Department issued proposed regulations addressing the deduction for owners of “pass-through” entities engaged in certain trades or businesses created by the recent federal tax reform legislation.  The Proposed Regulations provide guidance on which businesses would be eligible for the Pass-Through Deduction and would also provide rules for calculating various components of the limitations on an individual’s Pass-Through Deduction.  The Proposed Regulations contain several anti-abuse rules aimed at commonly discussed strategies for maximizing the Pass-Through Deduction for established trades or businesses.