Source: https://www.govinfo.gov/content/pkg/CFR-2025-title26-vol4/pdf/CFR-2025-title26-vol4-sec1-199A-1.pdf#page=1
Pages 1-1, text extracted with pdftotext (poppler), reading order.

Internal Revenue Service, Treasury

§ 1.199A–1

(iv) Charitable remainder trusts.
[T.D. 9847, 84 FR 2988, Feb. 8, 2019; T.D. 9847,
84 FR 15954, Apr. 17, 2019; T.D. 9899, 85 FR
38065, June 25, 2020]
EDITORIAL NOTE: At 84 FR 15954, Apr. 17,
2019, § 1.199A–0 was amended be adding an
entry for § 1.199A–2(b)(2)(iv), however, this
paragraph already exists and the amendment
could not be incorporated due to inaccurate
amendatory instruction.

rmajette on LAPJN3WLY3PROD with CFR

§ 1.199A–1

Operational rules.

(a) Overview—(1) In general. This section provides operational rules for calculating the section 199A(a) qualified
business income deduction (section
199A deduction) under section 199A of
the Internal Revenue Code (Code). This
section refers to the rules in §§ 1.199A–
2 through 1.199A–6. This paragraph (a)
provides an overview of this section.
Paragraph (b) of this section provides
definitions that apply for purposes of
section 199A and §§ 1.199A–1 through
1.199A–6. Paragraph (c) of this section
provides computational rules and examples for individuals whose taxable
income does not exceed the threshold
amount. Paragraph (d) of this section
provides computational rules and examples for individuals whose taxable
income exceeds the threshold amount.
Paragraph (e) of this section provides
special rules for purposes of section
199A and §§ 1.199A–1 through 1.199A–6.
This section and §§ 1.199A–2 through
1.199A–6 do not apply for purposes of
calculating the deduction in section
199A(g) for specified agricultural and
horticultural cooperatives.
(2) Usage of term individual. For purposes of applying the rules of §§ 1.199A–
1 through 1.199A–6, a reference to an individual includes a reference to a trust
(other than a grantor trust) or an estate to the extent that the section 199A
deduction is determined by the trust or
estate under the rules of § 1.199A–6.
(b) Definitions. For purposes of section 199A and §§ 1.199A–1 through
1.199A–6, the following definitions
apply:
(1) Aggregated trade or business means
two or more trades or businesses that
have been aggregated pursuant to
§ 1.199A–4.
(2) Applicable percentage means, with
respect to any taxable year, 100 percent
reduced (not below zero) by the per-

centage equal to the ratio that the taxable income of the individual for the
taxable year in excess of the threshold
amount, bears to $50,000 (or $100,000 in
the case of a joint return).
(3) Net capital gain means net capital
gain as defined in section 1222(11) plus
any qualified dividend income (as defined
in section 1(h)(11)(B)) for the taxable
year.
(4) Phase-in range means a range of
taxable income between the threshold
amount and the threshold amount plus
$50,000 (or $100,000 in the case of a joint
return).
(5) Qualified business income (QBI)
means the net amount of qualified
items of income, gain, deduction, and
loss with respect to any trade or business (or aggregated trade or business)
as determined under the rules of
§ 1.199A–3(b).
(6) QBI component means the amount
determined under paragraph (d)(2) of
this section.
(7) Qualified PTP income is defined in
§ 1.199A–3(c)(3).
(8) Qualified REIT dividends are defined in § 1.199A–3(c)(2).
(9) Reduction amount means, with respect to any taxable year, the excess
amount multiplied by the ratio that
the taxable income of the individual
for the taxable year in excess of the
threshold amount, bears to $50,000 (or
$100,000 in the case of a joint return).
For purposes of this paragraph (b)(9),
the excess amount is the amount by
which 20 percent of QBI exceeds the
greater of 50 percent of W–2 wages or
the sum of 25 percent of W–2 wages plus
2.5 percent of the UBIA of qualified
property.
(10) Relevant passthrough entity (RPE)
means a partnership (other than a
PTP) or an S corporation that is
owned, directly or indirectly, by at
least one individual, estate, or trust.
Other passthrough entities including
common trust funds as described in
§ 1.6032–1T and religious or apostolic organizations described in section 501(d)
are also treated as RPEs if the entity
files a Form 1065, U.S. Return of Partnership Income, and is owned, directly
or indirectly, by at least one individual, estate, or trust. A trust or estate is treated as an RPE to the extent
it passes through QBI, W–2 wages,

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