The fact that the new regulations under Code Section 199, released on May 24, 2006, are the final regulations should not be interpreted as an indication that the Treasury and the Internal Revenue Service will not be looking at Code Sec. 199 for a while.For one thing, the final regulations were accompanied by temporary and proposed regulations covering specific issues, and a statement that none of the regulations, final or proposed, address the changes made to Code Sec. 199 by the newly-enacted Tax Increase Prevention and Reconciliation Act of 2005. As predicted by the Treasury in originally opposing the adoption of Code Sec. 199, this is becoming one of those all-too-common code sections where even lengthy guidance is never enough and the questions keep coming.

The good news for tax practitioners is that businesses and members, partners and shareholders of pass-through entities will need all the help that they can get to take maximum advantage of the new deduction without violating any of the myriad rules associated with its enactment and implementation.

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