Congress Fixes "Grain Glitch" Error In 199A

On March 23, the Consolidated Appropriations Act (the "Appropriations Act") was signed into law by President Trump. Included in the Appropriations Act were certain tax law provisions, including technical corrections to the partnership audit rules, increases in the availability of the low income tax credit, and the correction of what many commentators referred to as the "grain glitch" in Section 199A.

Section 199A, the so called QBI or 20% pass-through deduction (the "QBI deduction"), was introduced in the 2017 tax act. The QBI deduction is effective for tax years beginning after December 31, 2017, and before January 1, 2026. The QBI deduction is complicated, but generally speaking, allows any taxpayer other than a C Corporation to deduct 20% of its qualified business income, and as relevant here, 20% of its qualified REIT dividends, qualified cooperative dividends, and qualified publicly traded partnership income. The QBI deduction is subject to many limitations