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Section 199A treatment for deductions involving REITs and RICs; OIRA review completed

OIRA review completed

OMB’s Office of Information and Regulatory Affairs (OIRA) completed its review of final regulations from the U.S. Treasury Department concerning the treatment of dividends paid by regulated investment companies (RICs) if the RIC has received real estate investment trust (REIT) dividends.

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The 2017 tax law (Pub. L. No. 115-97)—the law that is often referred to as the “Tax Cuts and Jobs Act” (TCJA)—included provisions addressing the application of the section 199A deduction to dividends paid by a RIC, when the RIC has itself received dividends from one or more REITs. Proposed regulations to implement these changes were released in January 2019. Read TaxNewsFlash

Treasury regulations that are identified as “major” regulations are subject to review by OMB’s OIRA before being issued, pursuant to Executive Order 13771. OIRA reported its review of the final regulations was completed on April 17, 2020.

OIRA has identified the final regulations, as follows:

These regulations are further described on the OIRA website as follows:

Guidance on computations necessary in computing the deduction for qualified business income under new 199A relating to qualified REIT dividends passed through RICs.

Now that OIRA review has been completed, Treasury and the IRS can be expected to release these final regulations for publication in the Federal Register—the exact date of publication not being known.

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