AICPA asks IRS for QBI deduction guidance

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The American Institute of CPAs has submitted comments to the Internal Revenue Service and the Treasury Department asking them for more guidance on the qualified business income deduction in the Tax Cuts and Jobs Act.

Last year, the IRS and the Treasury issued regulations on the QBI deduction and later updated the Frequently Asked Questions page on how to calculate QBI, along with the instructions for Form 8995, Qualified Business Income Deduction Simplified Computation, and Form 8995-A, Qualified Business Income Deduction.

However, the AICPA would also like to see more guidance about deductions for the self-employed, and charitable deductions. The AICPA recommends the Treasury and the IRS confirm that various self-employed deductions under sections 164(f), 162(l) and 404 of the Tax Code are not automatically reductions of QBI, and update the form instructions to reflect the same treatment for a charitable deduction under section 170.

“We urge that you provide additional certainty regarding which deductions are not reductions for QBI,” said Wednesday’s letter from AICPA Tax Executive Committee chair Christopher W. Hesse. “Specifically, we recommend that Treasury and the IRS confirm that various self-employed deductions under sections 164(f), 162(l), and 404 are not automatically reductions of QBI, and update form instructions to reflect the same treatment for a charitable deduction under section 170.”

Separately, the IRS released the second-quarter update to its 2019-2020 Priority Guidance Plan on Friday. While it does include some plans for guidance on section 199A, it doesn’t include the qualified business income provisions of 199A.

Separately, the AICPA also said Friday that it supports legislation recently introduced in the House that could make it easier for students to get a CPA license.

The bill, known as the Freedom to Invest in Tomorrow’s Workforce Act, or H.R. 5339, would expand eligible uses of section 529 education savings plans to include fees and expenses required to obtain or maintain a recognized post-secondary designation, such as the CPA or perhaps the Chartered Global Management Accountant (CGMA) credential.

The bill is sponsored on a bipartisan basis by Rep. Abigail Spanberger, D-Va., and Rob Wittman, R-Va. Although not specifically aimed at CPAs or CGMAs, it could provide accounting professionals with more financial flexibility as they try to advance their education while entering the workforce.

“The accounting profession thanks Rep. Spanberger and Rep. Wittman for their leadership on this important issue,” said AICPA President and CEO Barry Melancon in a statement Friday. “This legislation has the potential of assisting many thousands of CPA and CGMA candidates. The accounting profession touches nearly all aspects of business and capital markets and those with the CPA license and CGMA credential are committed to protecting the public’s interest.”

The AICPA noted there are a total of 85,859 unique CPA Exam candidates in the pipeline in 2018. According to the AICPA’s 2019 Trends Report, enrollments in undergraduate accounting programs are at the second highest level on record after pulling back slightly from their all-time high in 2015-2016. Close to 208,000 projected students were enrolled in undergraduate accounting programs during the 2017-2018 school year and more than 33,000 projected students were enrolled in master’s programs in 2017-2018. The National Association of State Boards of Accountancy reports there were more than 654,000 CPAs with active licenses as of May 29, 2019.

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