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IRS Issues Rev. Proc. to Clarify Passthrough Deduction for Real Estate

Tuesday, September 24, 2019 - 12:45PM

The Internal Revenue Service today published a revenue procedure clarifying that mixed-use property can be treated as a single real estate enterprise under the passthrough deduction added to the Internal Revenue Code during 2017 tax reform legislation. Revenue Procedure 2019-38 clarifies when rental real estate rises to the level of a trade or business, which is required for the passthrough deduction. The revenue procedure also clarifies that property leased on a triple-net basis does not qualify for the passthrough.

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