Washington, D.C. (March 11, 2024) – The American Institute of CPAs (AICPA) sent a letter to the Internal Revenue Service (IRS) requesting guidance on section 461(l), also known as the limitation on excess business losses (EBLs) of noncorporate taxpayers, enacted under the Tax Cuts and Jobs Act (TCJA). The letter also provides recommendations to help the IRS deliver practical guidance that would be helpful to both taxpayers and tax practitioners.
IRC Section 461(l) disallows EBLs for taxpayers other than C corporations for tax years beginning after 2020 and before 2029. The limitation has broad applicability and the potential to impact a wide range of taxpayers.
AICPA’s recommendations focus on the following:
Operating Principles
Definitions Related to Business Income
Definitions Related to Business Deductions and Losses
Treatment of Gains and Losses
Treatment of Qualified Plans
Treatment of Industry Specific Issues
Application to Trusts and Estates
“Despite having been enacted several years ago, there is currently very little guidance from the IRS relating to IRC section 461(l),” says Peter Mills, Senior Manager, AICPA Tax Policy & Advocacy. “The AICPA’s recommendations highlight several areas that are important for the IRS to address and will be helpful to many taxpayers, as well as the tax professionals assisting them.”
About the American Institute of CPAs
The American Institute of CPAs® (AICPA®) is the world’s largest member association representing the CPA profession, with more than 415,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. AICPA sets ethical standards for its members and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives continuing education to advance the vitality, relevance and quality of the profession.
Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com