Tax Facts

8594 / What is the result if a pass-through entity receives income in a year that began before tax reform became effective?

If a pass-through entity received income in a tax year that began before January 1, 2018, but after December 31, 2017 (i.e., a non-calendar year entity), the income is treated as though received or incurred in the year in which the entity’s tax year ends.1 Therefore, these taxpayers will be entitled to claim the QBI deduction with respect to income received in 2017 if all other requirements for claiming the deduction are satisfied.

1. Treas. Reg. § 1.199A-1(f)(2).

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