Treasury Official Clarifies Section 199A De Minimis Rules

The proposed regulations under new section 199A, which allows a 20% deduction for qualifying business owners, provide a de minimis rule which generally provides that a business will not be treated as a disqualified “specified service trade or business” if less than 5% or 10% of the gross receipts (depending on the amount of the business’s gross receipts) are attributable to certain barred services.  At the ABA Tax Conference, Audrey Ellis, attorney-advisory within Treasury’s Office of Tax Legislative Counsel, clarified that if a taxpayer with a business subject to the 10% threshold receives 11% of its income from barred services, the taxpayer will be disallowed the deduction for the entire amount of its business income.

Read more:  Treasury Clarifies 199A De Minimis Rules Have Cliff Effect

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