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Business Development Companies
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Re: Are all BDC dividends eligible for the 20% tax credit? It's pretty clear that BDC dividends don't qualify for the 20% deduction provided by new IRC Section 199A. First, the law itself specifically provides that REIT dividends and income from publicly-traded partnerships qualifies for the deduction. There is nothing in the law that mentions BDC dividends as qualifying, so that's the real answer. From the law: Combined qualified business income amountFor purposes of this section— (1)In generalThe term “combined qualified business income amount” means, with respect to any taxable year, an amount equal to— (A) the sum of the amounts determined under paragraph (2) for each qualified trade or business carried on by the taxpayer, plus (B) 20 percent of the aggregate amount of the qualified REIT dividends and qualified publicly traded partnership income of the taxpayer for the taxable year. There are reasons for BDCs being omitted from the deduction, but it doesn't matter. BDCs aren't included in the types of dividends that qualify. Some BDCs have a decent policy argument for being entitled to the 20% deduction but they still didn't make the cut. |
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