Chapter 3 TCJA: Depreciation, Bonus Dep., 179, NOLs, and 461(L) Depreciation

Transcription

1 Chapter 3 TCJA: Depreciation, Bonus Dep., 179, NOLs, and 461(L) Depreciation

2 ADS Recovery Period for Residential Property is Shortened (Section 168(g)(2)(C)) ADS recovery period for residential rental property from 40 years to 30 years. Effective Date: Property placed in service after December 31, Sunset Date: None 3 Qualified Improvement Property (QIP) Section 168(e)(6) QIP: Any improvement to an interior portion of a building that is nonresidential real property if: 1) The improvement is placed in service after the date the building was first placed in service by any person (per Rev Proc ) 2) Not a building enlargement, 3) Not an elevator or escalator, and 4) Not the internal structural framework of the building. 4

3 TCJA Changes to QIP Eliminates the separate definitions of qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property. Per the TCJA Conference Agreement, the TCJA provides a general 15-year recovery period (S/L) for qualified improvement property. Congressional intent is crystal clear, but this language was not included in the statute. Treasury unofficially says it cannot correct with regs. The Bluebook declares that [a] technical correction may be necessary to reflect this intent (Ft. 632 & 633). The error has a direct impact on bonus depreciation eligibility. 5 A restaurant building placed in service after 2017 that is not QIP is depreciated over 25 years as nonresidential real property, straight-line and mid-month convention. A conforming change to section 179 so that only QIP meets section 179. Bad news: A restaurant building placed in service after 2017 cannot get sec Effective: Property Placed in service after

4 Farm Property MACRS life is shortened to 5 (from 7) for any new (original use) machinery or equipment used in farming. Not for grain bin, cotton ginning asset, fence or other land improvements. 7 Farmers can now use 200% DDB for property a recovery period of 10 years or less. Effective Date: Property placed in service after Dec. 31, 2017 in tax years ending after such date. 8

5 Passenger Autos New Sec. 280F Limits (Without Bonus Depreciation) New Law 2017 Year 1 $10,000 $3,160 Year 2 $16,000 $5,100 Year 3 $9,600 $3,050 Year 4 and later $5,760 $1,875 Effective Date: Property placed in service after Dec. 31, Computers and Peripheral Equipment is No Longer Listed Property Section 280F(d)(4)(A) TCJA removes computer or peripheral equipment from the definition of listed property. Such property is therefore not subject to the heightened substantiation requirements that apply to listed property. 10

6 Bonus Depreciation TCJA: 100% Bonus Depreciation for property acquired and placed in service after 9/27/2017 and before

7 Qualified Property: 1) MACRS property that has a recovery period of 20 years or less; 2) Computer software (defined in section 167(f)(1)); 3) Water utility property; 4) A qualified film or television production (defined in section 181(d)); 5) A qualified live theatrical production defined in section 181(e); or 6) A specified plant (defined in section 168(k)(5)(B) and for which the taxpayer has made an election to apply section 168(k)(5)(B)). 13 Floor Plan Financing Interest If a car dealership uses floor plan financing debt to finance the acquisition of its motor vehicles, it generally cannot claim bonus depreciation on any of the non-motor-vehicle property used in its trade or business (e.g., desks and computers. etc.) Dealer OK if dealer meets the small business gross receipts exception in section 163(j) (> 25 million). 14

8 Property Acquired Before 9/28/2017 and Placed in Service After 9/27/ Property Acquired and Placed in Service On or After 9/28/

9 Expanded to used property purchases if certain conditions are met. 17 REG (Aug. 8, 2018) Proposed Regs. Clarify TCJA Change to Bonus Depreciation (no discussion of the QIP issue) 18

10 Used Property Requirements The property must not have been used (depreciable interest) by the taxpayer or a predecessor at any time prior to the acquisition; No bonus depreciation on property received as a gift or from a decedent. For like-kind exchanges or involuntary conversions: o Excess basis qualifies for bonus depreciation on original use and used replacement property. o Exchange basis only qualifies for bonus on original use property. 19 Bonus depreciation on used property does not apply to property acquired in a nontaxable exchange such as a reorganization. Used property does not qualify for bonus if acquired from a member of the taxpayer's family, including a spouse, ancestors, and lineal descendants, or from another related entity as defined in section 267, nor to property acquired from a person who controls, is controlled by, or is under common control with, the taxpayer. 20

11 Prop. regs. clarify that leased property may be eligible for bonus depreciation upon subsequent acquisition, provided the lessee did not maintain a depreciable interest in the property while leasing. Prop. regs. clarify that partners can get bonus depreciation from a section 743(b) adjustment upon the purchase (but not inheritance) of a partnership interest. But not a section 734(b) adjustment (from say a redemption). 21 Per previous IRS guidance acquisition occurs when the taxpayer pays or incurs the cost of the property. Under the proposed regulations, when a taxpayer acquires property pursuant to a written binding contract, the acquisition date is the date of the contract (and no later). For self-constructed property, the acquisition rules of the statute are met if the taxpayer begins manufacturing, constructing or producing the property after September 27,

12 $8,000 Increase For Qualified Property In The First-Year Depreciation Cap For Passenger Autos is Extended to autos placed in service after 12/31/ Passenger Autos With Bonus Depreciation Acquired after 9/27/2017 and Placed in Service in 2018 New Law Year 1 $18,000 Year 2 $16,000 Year 3 $9,600 Year 4 $5,760 and later 24

13 No Such Limits For SUVs 100% in Year 1 (for 100% Business Use) 25 Gross Vehicle Weight 6,100 to 7,050

14 2014 Jeep Grand Cherokee Gross Vehicle Weight 6,100 to 7,050 Tesla Model X: GVW 6,581 minimum Gross Vehicle Weight 6,100 to 7,050 Tesla Credit drops from $7,500 to zero during 2019.

15 All Electric: 0 to 60 in 4.5 seconds; $70, Jaguar I Pace: GVW 5,886 Gross Vehicle Weight 6,100 to 7,050 Gas Powered 2019 Cadillac XT5: GVW 6001 Gross Vehicle Weight 6,100 to 7,050

16 1245 And 1250 Depreciation Recapture per the preamble: For purposes of section 1245 the [bonus depreciation] deduction is an amount allowed or allowable for depreciation. Further, for purposes of section 1250(b) the [bonus depreciation] deduction is not a straight line method. 31 TCJA Bonus Dep. Effective Date Property acquired and placed in service after September 27, 2017, as well as specified plants planted or grafted after that date. Not treated as acquired after the date on which a written binding contract is entered into for its acquisition. Transition Rule. Can elect to utilize 50% bonus depreciation, instead of 100%, for qualified property placed in service during the first tax year ending after September 27,

17 Section 179 A permanent TCJA change 179 Amounts Over Time 34

18 Maximum deduction $1 mil. (up from $500,000) Phase-out begins at $2.5 mil. (up from 2 mil.) The $25K sec. 179 limit on heavy SUVs is inflation indexed. But bonus depreciation for such vehicles, new or used, acquired and placed in service after 9/27/2017 and before 2023, is 100%. 35 Section 179 property is expanded to include certain tangible personal property used predominantly to furnish lodging or in connection with furnishing lodging (Conf. Rpt.): beds and other furniture, refrigerators, ranges, and other equipment used in the living quarters of a lodging facility such as an apartment house, dormitory, or any other facility (or part of a facility) where sleeping accommodations are provided and let. See Treas. Reg. sec (h). Conf. Rpt. Footnote

19 Qualified Real Property Under 179 IRS Rev. Proc (12/21/2018) 37 (1) If Placed in Service in TYBA 2017: (A) Qualified Improvement Property (QIP) Defined in Section 168(e)(6) QIP: Any improvement to an interior portion of a building that is nonresidential real property if: 1) The improvement is placed in service after the date the building was first placed in service by any person (per Rev Proc ) 2) Not a building enlargement, 3) Not an elevator or escalator, and 4) Not the internal structural framework of the building. 38

20 A) An improvement to nonresidential real property placed in service after the date such property was first placed in service by any person : Is 1250 Property, and Is: o A roof; o Heating, ventilation, and air-conditioning property; o A fire protection and alarm system; and security system. 39 (2) If Placed in Service in a Tax Year (fiscal year) beginning in 2017 and ending in 2018 Qualified real property; qualified leasehold improvement property qualified restaurant property, or qualified retail improvement property. Defined in defined in 168(e)(6)), (7) and (8) 40

21 Effective Date: Property placed in service in tax years beginning after Dec. 31, Consider the De Minimis Safe Harbor Taxpayers may elect to apply a de minimis safe harbor to amounts paid to acquire or produce tangible property to the extent such amounts are deducted for financial accounting purposes or in keeping books and records. With AFS. Up to $5,000 per invoice or item. Without AFS. If no AFS, deduct amounts up to $2,

22 If UNICAP Can Be Avoided Gone if gross receipts are under 25 million.: [D]e minimis amounts you pay for tangible property may be subject to capitalization under 263A, if the amounts include the direct or allocable indirect costs of other property you produced or acquired for resale. For example, you must capitalize all the direct and allocable indirect costs of constructing a new building. Election sacrifices UBIA, if relevant, under 199A. De Minimis election avoids depreciation recapture. 43 Background New NOL Rules

23 Repeals Two-Year Carryback, except: o o TCJA Farmers get 2 Year carryback. Special Rules apply to property and casualty insurance companies. The NOL deduction is limited to 80 percent of taxable income (before the NOL deduction). Indefinite (v. 20 year) carryforward period. 45 Effective for losses arising in tax years beginning after o o o Pre-2018 losses escape the 80% of T.I. limit. Pre-2018 losses also can be carried back. Clarification is needed for fiscal year taxpayers but legislative intent is clear in the TCJA Committee Reports 46

24 beginning (intended per Committee Rpt) 47 Example: <$90,000> NOL carried over to Assume that the pre-nol deduction 2019 T.I. is $100,000. Only <$80,000> (80% x $100,000) of the 2018 NOL can be used. <10,000> is carried forward to

25 Draft Form 1045 Instructions (9/28/2018) 49 OBSERVATION For tax years 2018 through 2025, personal casualty and theft losses are not allowed unless the casualty loss arises from a Federally declared disaster (as defined in section 165(i)(5)); therefore, only Federally declared disaster losses can generate an NOL in

26 Excess Business Loss Limit (Sec. 461(l)) Excess Business Loss Not Allowed in Current Year Applies to all taxpayers except C corporations. Excess Business Loss : 1) Aggregate deductions attributable to trades or businesses, minus 2) The sum of: a) Aggregate gross income attributable to such trades or businesses, plus: b) $250,000, or $500,000 (if MFJ) (inflation indexed) 52

27 The excess loss is treated as an NOL carryforward to the following tax year under section 172. (offsets 80% of T.I.) Is the NOL carryforward itself an excess business loss? Applied at partner or S shareholder level. Applies to Trusts and Estates. Effective Date: TYBA 12/31/2017 and before Jan. 1, Bluebook Comment Out-of-Sync with Forms, Instructions, and the Statute The aggregate deductions taken into account to determine the excess business loss of the taxpayer for the taxable year that are attributable to trades or businesses of the taxpayer are determined without regard to the deduction under section 172 or 199A. Ft. 208 For example, assume that a taxpayer has an NOL carryover from a prior taxable year to the current taxable year. Such NOL carryover is not part of the taxpayer s aggregate deductions attributable to the trade or business for the current taxable year under section 461(l). Foonote 208: A technical correction may be necessary to 54 carry out this intent.

28 Because section 461(l) is applied at the partner or S shareholder level, it will apply to a calendar year partner s K-1 loss from a fiscal year partnership beginning in 2017 and ending in (see 461(l)(4)(B)) Individuals Trusts Estates Exempt Orgs. UBTI 56

29 Ordering Rules for Losses (Per Draft Form 461 Instructions) (1) A partner s allowed loss is limited to outside basis ( 704(d)) S Corp shareholders stock and debt basis ( 1366(d)). (2) Losses are only allowed to the extent the taxpayer is at-risk ( 465). Exception for qualified nonrecourse financing of real property. (3) The passive loss limits ( 469). (4) The new 461 limit (500K MFJ/ 250K other). (5) 199A with respect to losses. 57 Farmers (per draft Form 461 instructions)

30 Example (1) For 2018, T (a MFJ taxpayer) has: Schedule F Farming: 1,000,000 gross income and 1,600,000 business deductions <$600,000> Net Farming Loss T has no other income or deductions so taxable income is <$600,000> after adding back the standard deduction. The threshold amount is $500,000 (MFJ). The excess business loss is <$100,000> 59 Allowed Loss (MFJ) Excess Business Loss 2018 Negative T.I. of <600,000> <500,000> <100,000> Draft Form 1045 Instructions NOL carryforward Or carryback for farmers* per 172(b)(1)(B)(i) Deemed 172 NOL carryover to following year per 461(l)(2) 60

31 Draft Form 461 Instructions (9/27/2018) Suggests suspended loss due to (1) outside basis of partner (2) at-risk (3) passive loss, if freed-up in 2018, are included in figuring the 2018 excess business loss. The loss limit applies to all business deductions so it LIKELY applies to all NOL deductions under 172 (Form 1040 Other Income line). o Including, presumably, NOLs from pre-2018 years. o NOL s do not transcend death. 62

32 Observation #1: 461(l) could be a big surprise in the year that nonpassive losses are freed-up from a complete disposition of a passive activity. Observation #2: Consider impact of excess losses when claiming bonus depreciation. Observation #3: Consider section 481 adjustments from accounting method changes

33 65 Bluebook Comment Out-of-Sync with Forms and Instructions An excess business loss (the deduction for which is limited by section 461(l)) does not take into account gross income or gains or deductions attributable to the trade or business of performance of services as an employee.: Footnote 209 referenced by the above sentence: A technical correction may be necessary to carry out this intent. 66

34 Form 1040 Schedule C or C-EZ 67 Form 1040 Schedule D Capital Gain or Loss 68

35 Form 1040 Form Form 1040 Attach Form 4797 Form 1040 Schedule E 70

36 Form 1040 Schedule F 71 72

37 W-2 Wages 73 Example (2) For 2018, T (a single taxpayer) has: Schedule C with 1,000,000 gross income and 1,600,000 business deductions <$600,000> Net Loss T has nonbusiness long-term capital gain of $900,000 The threshold amount is $250,000 (single). The excess business loss is <$350,000> 74

38 Line 2: Sch. C Loss Line 3: Sch. D LTCG <600,000> 900,000 Line 9: Combine Lines 1 through 8 300, Non-Business Gross Income in line 9 Non-Business Loss or Deductions in line 9 Subtract line 11 from line 10 = 900, ,000 If line 12 is positive (net nonbusiness income), enter as a negative and if line 12 is negative (net nonbusiness deductions) enter as a positive. Add line 9 and line 13 (net business loss): 300K + <900K> = Enter 250,000 (or 500,000 if MFJ) Add line 14 and 15. A negative number is the excess business loss. If zero or greater, do not attach this form to your return. <900,000> <600,000> 250,000 <350,000> 76

39 Line 12: Sch. C Loss <600,000> Line 3: Sch. D LTCG 900,000 An excess business loss is reported as a positive number on Line 21 Other Income with ELA on the dotted line Line 21: Other Income ELA. 350,000 Line 22: Combined Amounts in Far Right Column 650, Draft Form Pg. 2 Line 6: Additional income and adjustments Attach Sch ,000 Line 7: Adjusted Gross Income 650,000 78

40 Example (3) Modification of Ex. 2 If W-2 wages were $350,000, then no excess business loss. Form 461 line 15 would be zero and Form 461 would not be attached to the Form Line 1: W-2 Wages 350,000 Line 2: Sch. C Loss <600,000> Line 3: Sch. D LTCG 900,000 Line 9: Combine Lines 1 through 8 650, ,000 80

41 Non-Business Gross Income in line 9 Non-Business Loss or Deductions in line 9 Subtract line 11 from line 10 = 900, ,000 If line 12 is positive (net nonbusiness income), enter as a negative and if line 12 is negative (net nonbusiness deductions) enter as a positive. Add line 9 and line 13 (net business loss): 650K + <900K> = Enter 250,000 (or 500,000 if MFJ) Add line 14 and 15. A negative number is the excess business loss. If zero or greater, do not attach this form to your return. <900,000> <250,000> 250,000 0 Do Not Attach Form 461 to your return. 81 Interaction with the 199A Deduction 199A. Excess business losses suspended under 461(l) do not reduce QBI or QPTPI, until freed-up. So excess business losses reduce the QBI loss carryforward. So 199A, with respect to a loss, applies AFTER section 461(l) has limited an excess business loss. 82

42 Example (4) Joint Return: Investment interest income of $1,500,000 (nonbus.). <$1,200,000> Sch C net loss. Excess business loss is <$700,000>: + <1,200,000> Sch. C + 500,000 Threshold Amount = <700,000> Excess Business Loss (EBL) The QBI loss carryforward is only <$500,000> (<1,200,000> Sch C loss minus <700,000> EBL) 83 Interaction with the 199A Deduction Normally no 199A deduction with a net business loss; however, qualified publicly traded partnership income could be positive while QBI is negative (and vice versa). 84

43 Example (5) Joint Return: $100,000 QPTPI (a T-B) generates a $20, A deduction on Form 1040 line 9. Investment interest income of $1,500,000 (nonbus.). <$1,000,000> Sch C net loss. Excess business loss is <$400,000>: 100,000 Sch E + + <1,000,000> Sch. C = + 500,000 Threshold Amount = <400,000> Excess Business Loss 85 Line 2: Sch. C Loss Line 5: Sch. E <1,000, ,000 Line 9: Combine Lines 1 through 8 <900,000> 86

44 Add line 9 and line 13 (net business loss): <900K> Enter 250,000 (or 500,000 if MFJ) Add line 14 and 15. A negative number is the excess business loss. If zero or greater, do not attach this form to your return. <900,000> 500,000 <400,000> 87 But must we increase the excess business business loss to <$420,000> (<400,000> + <$20,000> 199A deduction)?? o It is removed from an NOL (per 172(d)(8)). o Where might it go on Form 461? 88

45 89 Line 2: Sch. C Loss <1,000,000> Line 5: Sch. E 100,000 Line 9: Combine Lines 1 through 8 <20,000> <920,000> 90

46 Add line 9 and line 13 (net business loss): <920K> Enter 250,000 (or 500,000 if MFJ) Add line 14 and 15. A negative number is the excess business loss. If zero or greater, do not attach this form to your return. <920,000> 500,000 <420,000> 91 What About the 199A Computation? (same facts as Ex. 5) Assume that the 199A deduction does not increase the 461(l) excess business loss. 92

47 [I]f deductions are disallowed by reason of 461(l), those disallowed deductions will not be included in the QBI computation in the year incurred (because they are not includable in taxable income), 199A Prop. Reg. Preamble* * The preamble also encourages comments on the interaction of 199A and 461(l) 93 Taxable Income (Pre-199A) MFJ Investment Interest Income 1,500,000 QPTPI (T-B) 100,000* Schedule C Non-SSTB Loss - 1,000,000 Not QBI so no W2 +UBIA Requirement 94

48 Taxable Income (Pre-199A) MFJ Investment Interest Income 1,500,000 QPTPI (T-B) 100,000* Schedule C Non-SSTB Loss - 1,000,000 Line 21 Other Income ELA 400,000 AGI 1,000,000 -Standard Deduction - 24,000 Taxable Income = 976,000 Not QBI so no W2 +UBIA Requirement 95 QBI (after 461(l)) Sch C <600,000> <600,000> QBI Carryforward 96

49 QBI (after 461(l)) QPTPI Tentative 199A Deduction* Sch C <600,000> 100,000 20,000 <600,000> QBI Carryforward *20% x 100,000 ( 0 (QBI) + 100,000 (QPTPI) ) = $20, The Lesser of QBI (after 461(l)) QPTPI Tentative 199A Deduction* 20% x T.I. Minus Net Cap. Gain ** 199A Deduction Sch C <600,000> 100,000 20, ,200 20,000 <600,000> QBI Carryforward *20% x 100,000 ( 0 (QBI) + 100,000 (QPTPI) ) = $20,000 **20% x 976,000 (976,000 (T.I.) $0 (net capital gain) = 195,200 98

50 Draft Form Pg. 2 20, Example (6): Ex. 2 followed to 2019 For 2018, T (a single taxpayer) has: Schedule C with 1,000,000 gross income and 1,600,000 business deductions <$600,000> Net Loss T has nonbusiness long-term capital gain of $900,000 The threshold amount is $250,000 (single). The excess business loss is <$350,000> 100

51 Income/ Loss Capital Gain 900K Net Business Loss of <600K> Allowed Loss? AGI 101 Income/ Loss 900K Deemed NOL Carryover Capital Gain Net Business Loss of <600K> Allowed Loss <250K> <350>* AGI 650K * Excess Business Loss 102

52 Continued to 2019 Assume that the <$350,000> 172 deduction (NOL) is a business deduction for purposes of 461(l). 103 In 2019 assume $500,000 of pre-nol deduction T.I., and assume that all income is dividends, interest, pensions nonbusiness income. NOL Deduction T.I. Limit = $400,000 (80% x $500,000) so 172 does not limit the 2018 loss of <$350,000>. 461(l) excess business loss (EBL) is $100,000* *$350,000 (T-B deductions pre-461(l)) minus the sum of (a) $0 (T-B gross income) plus (b) $250,000)= $100,000. Only <$250,000> of the <350,000> 2018 NOL is allowed in due to the section 461(l) limit). <100,000> EBL is carried forward to 2020 per section 461(l). 104

53 Example (7). Same as Example (6) but with $300,000 of pre- NOL T.I. in 2019 and assuming the % of T.I. on NOLs applies before 461(l) Recall, the excess business loss carried forward to 2019 is <$350,000> 105 In 2019 assume $300,000 of pre-nol T.I., and assume that all income is dividends, interest, pensions nonbusiness income. NOL Deduction T.I. Limit = $240,000 (80% x $300,000) so the 2019 NOL deduction is <$240,000> and the balance of <$110,000> ($350,000 - $240,000) carries forward per 172. The 2019 excess business loss is zero*: *$240,000 (TB deductions pre-461(l)) minus the sum of (a) ($0 (T-B gross income) plus (b) 250,000 = <$10,000>** = $0. **The excess business loss cannot be negative. So the <$110,000> loss carries forward pursuant to section 172(b)(1)(A)(ii) rather than section 461(l). 106

54 What is 461(l) business income or losses? 107 Compare Sec. 62(a)(1): [Above AGI] Trade and business deductions. The deductions allowed by this chapter which are attributable to a trade or business carried on by the taxpayer, if such trade or business does not consist of the performance of services by the taxpayer as an employee. Section 172(d)(4): Nonbusiness deductions of taxpayers other than corporations. In the case of a taxpayer other than a corporation, the deductions allowable by this chapter which are not attributable to a taxpayer's trade or business shall be allowed only to the extent of the amount of the gross income not derived from such trade or business. Sec. 461(l): The term excess business loss means the excess (if any) of the aggregate deductions of the taxpayer for the taxable year which are attributable to trades or businesses of such taxpayer over the aggregate gross income or gain of such taxpayer for the taxable year which is attributable to such trades 108 or businesses.

55 What Can We Learn from Draft Instructions for Form 1045? Unclear exactly how much the 172 NOL definition of business income or loss will compare to the 461(l) business income or loss. Form 1045 applies to NOL carrybacks (2018 farming losses) not carryforwards. 109 T-B Income Draft Form 1045 Instructions (9/28/2018) 110

56 Draft Form 1045 Instructions (9/28/2018) The casualty loss exception is statutory in 172(d)(4)(C) and will likely be nonbusiness for 461(l) purposes. 111 Connected to a T-B: Draft Form 1045 Instructions (9/28/2018) 199A deduction is NOT allowed in an NOL 172(d)(8) 112

57 Draft Form 1045 Instructions (9/28/2018) 113 Tax Prep. Fees, and Tax Dispute Expenses Relating to Sch C or E Taxpayer (T) pays a tax preparer $2,000 to prepare her 2018 tax return. $1,200 is properly allocable to preparing Schedule C and the other $800 to Schs. B and A. During 2018, T also pays P $4,000 for services rendered in resolving IRS proposed income tax deficiencies relating to the prior year Sch. C. The $1,200 and $4,000 are attributable to a T or B (per section 62) and deductible above AGI. Rev. Rul State Income Tax on Sch C income, though not above AGI per Reg T(d) due to remote connection to T-B, are attributable to a T-B for NOL purposes. See Rev. Rul But only relevant if allowed as a deduction in T.I.. 114

58 Pub 526 on NOLs (2017) Nonbusiness Income 115 Polling Question (Multiple Choice) Is it likely that W-2 wages are attributable to a business under section 461(l)? (a) No. (b) Yes. (c) Need more guidance to be certain. (d) None of the above.

59 What is a T-B? 162 v. 212 will distinguish a T-B from investment it appears: o Same as 172 o Same as section 199A o Same as section 1411 o Likely same as 163(j) o Presumably 461(l) 117 Form 461 Instructions 118