Final regulations address Section 199A deduction for RIC shareholders

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July 2020

Overview

The IRS and Treasury issued final regulations on June 24 related to the qualified business income deduction under Section 199A. The final regulations adopt the proposed rules allowing regulated investment companies (RICs) to pass through qualified real estate investment trust (REIT) dividends to their shareholders. The IRS and Treasury continue to evaluate whether RICs may pass through other sources of income to shareholders for Section 199A purposes. 

The takeaway

The final regulations provide RICs with the ability to pass through qualified REIT dividends to shareholders consistent with the 2019 proposed regulations. It remains uncertain whether the IRS and Treasury will expand this conduit treatment to other types of income earned by RICs for Section 199A purposes.

Contact us

Brian Rebhun

Asset Management Tax Leader, PwC US

Adam Feuerstein

Principal, National Real Estate Tax Technical Leader, PwC US

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