These final regulations provide guidance regarding how a partnership can designate a partnership representative under the new centralized partnership audit regime enacted by section 1101 of the Bipartisan Budget Act of 2015. The regulations provide guidance on eligibility requirements for a partnership representative, authority of the partnership representative, resignation of a partnership representative, and revocation of a partnership representative. These regulations also finalize the temporary regulations regarding how partnerships can elect into the centralized partnership audit regime for tax years ending between November 2, 2015 and December 31, 2017.

This notice sets forth updates on the corporate bond monthly yield curve, the corresponding spot segment rates for August 2018 used under § 417(e)(3)(D), the 24-month average segment rates applicable for August 2018, and the 30-year Treasury rates, as reflected by the application of § 430(h)(2)(C)(iv).

This notice contains a proposed revenue procedure that provides guidance on methods for calculating W–2 wages for purposes of section 199A of the Internal Revenue Code (Code) and proposed §§ 1.199A–1 through –6 of the Income Tax Regulations (26 CFR part 1) which are being published contemporaneously with this notice. Specifically, this notice provides methods for calculating W–2 wages (1) for purposes of section 199A(b)(2) which, for certain taxpayers, provides a limitation, based on W–2 wages, to the amount of qualified business income subject to the deduction under section 199A; and (2) for purposes of section 199A(b)(7) which, for certain specified agricultural and horticultural cooperative patrons, provides a reduction to the section 199A(a) deduction based on W–2 wages.

Section 199A provides that, for taxable years beginning after December 31, 2017 and before January 1, 2026, taxpayers other than C corporations may deduct 20 percent of the qualified business income from the taxpayer’s qualified trades or businesses, which can be operated through a partnership, S corporation, trust, estate, or sole proprietorship. The deduction is subject to multiple limitations based on the type of trade or business, the taxpayer’s taxable income, the amount of W–2 wages paid with respect to the qualified trade or business, and the unadjusted basis of qualified property held by the trade or business. Taxpayers other than C corporations generally may also deduct 20 percent of aggregate qualified REIT dividends and qualified publicly traded partnership income. Special rules apply to specified agricultural or horticultural cooperatives. The proposed regulations provide computational, definitional, and anti-abuse guidance necessary to apply these rules.