Tax reform added a new section 199A that creates a potential deduction of 20% of qualified business income from partnerships, S corporations, and sole proprietorships. Availability of the deduction is predicated on the trade or business and income being “qualified,” but in many situations application of the new law is unclear.
Taxpayers have questioned whether income from mineral interests, such as royalties and working interests, is classified as qualified business income for purposes of the new section 199A deduction. Based on a review of the relevant authorities, this KPMG report explains why mineral royalties held for investment are not likely to qualify for the 20% deduction and why working interest income may be eligible for the deduction.
Read a June 2018 report [PDF 85 KB] prepared by KPMG LLP: What’s News in Tax: Is Mineral Interest Income Eligible for the Section 199A Deduction? It Depends
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