Chamber of Commerce wants guidance on tax law

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The U.S. Chamber of Commerce is asking the Internal Revenue Service for more guidance on the Tax Cuts and Jobs Act, asking for language specifying how qualified business income and limitations on business interest should be defined, among other matters.

The Chamber, which is one of the most powerful business lobbies in the country, first cited a recent request from the American Institute of CPAs for more guidance on how “qualified business income” should be defined.

“Guidance should provide that all qualified trade/business activities may be aggregated at the partner level for purposes of the wage and asset tests,” said the chamber in a letter last week. “The AICPA recently provided a comment letter indicating a number of areas where guidance is needed to ensure consistency among industries and taxpayers. Section 14 highlights the calculation of QBI can be complicated with multi-tier entities and profitable entities existing with loss entities.”

The chamber wants to know whether all similar qualified businesses are aggregated for purposes of the calculation or if each business is evaluated separately. “Clarity is needed, for taxpayers with non-qualified business activities, as to whether or not there is a de minimis percentage at which the activity is not excluded, or whether the taxpayer makes separate computations for the personal service activity versus the non-personal service activity,” said the letter.

It also wants to know whether a trade or business is defined as an activity within an entity. “For example, what if an entity has two clearly separate trades or businesses?”

The letter also requests the IRS to issue guidance providing that mutual fund shareholders who receive dividends from real estate investment trusts can also receive the 20 percent deduction for pass-through businesses.

The chamber also asked for application of the 30-year alternative depreciation system, or ADS, to existing property of real estate businesses. “While the effective date language indicates that real estate firms that opt to deduct business interest would depreciate existing residential real estate over the new ADS period of 30 years, the language could be read to apply the 30-year ADS period only to properties placed in service after 2017, requiring such real estate firms to depreciate existing residential real estate over 40 years, the prior-law ADS period. This is in contrast to prior law’s general depreciation period of 27.5 years applicable to residential real estate.”

In addition, the chamber is asking for more clarification on a wide range of issues, including foreign tax credits, the new Base Erosion and Anti-Abuse Tax, also known as BEAT, and another new feature of the tax reform law, Global Intangible Low-Taxed Income, or GILTI.

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