Treasury Proposes Pass-Through (199A) Rules With Implications for Ag

Non-corporate businesses made up of more than one entity will be able to band together to claim a new 20% reduction on their income, according to proposed rules issued this week by the Treasury Department and IRS.Known as pass-throughs, the rule is meant to keep single businesses that operate through multiple legal entities from reorganizing themselves for tax purposes, a senior Treasury official said. The IRS is soliciting comments on the assumptions and the methodology used to calculate the compliance costs imposed by the proposed regulations.The agency also said it will hold an October 16 public hearing on the proposed rules. The aggregation allowance should also ensure that pass-throughs generally face as low an effective tax rate as possible. For agriculture, the regulations proposed come with favorable terms for farms and ranches structured as pass-throughs — partnerships, limited liability companies or sole proprietorships — according to several tax consultants and accountants.However, it appears cash rent or crop-share landlords will not qualify for the new deduction, known as Section 199A.