AICPA writes Treasury and IRS about guidance for limitations on excess business losses for noncorporate taxpayers

March 27, 2019

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The American Institute of CPAs (AICPA) has written to the U.S. Department of the Treasury and the Internal Revenue Service (IRS) making recommendations related to guidance for Internal Revenue Code Section 461(l), which is also known as Limitations on Excess Business Losses (EBLs) of Noncorporate Taxpayers.  Section 461(l) was added to the Internal Revenue Code under the Tax Cuts and Jobs Act (TCJA).                                             

The AICPA wrote in its February 28 letter that taxpayers need more guidance on section 461(l) than Treasury and the IRS have provided in Information Release 2018-254 and in the draft instructions for the 2018 Form 461, Limitation on Business Losses.

The AICPA made recommendations about the need for substantial guidance for section 461(l) in the following areas: operating principles, definitions related to business income, definitions related to business deductions and losses, treatment of gain and losses, treatment of qualified plans, treatment of industry specific issues and application to trusts and estates.

Read Questions remain about the excess business loss rule in Tax Insider by Christopher W. Hesse, CPA, vice chair of the AICPA Tax Executive Committee and a principal in the National Tax Office of CliftonLarsonAllen LLP, for a discussion about the issues.