Article on More Losses, More Problems: Excess Business Loss Rules

Libin Zhang recently published an Article entitled, More Losses, More Problems: Excess Business Loss Rules, Tax Law: Tax Law & Policy eJournal (2019). Provided below is an abstract of the Article.

The Tax Cuts and Jobs Act enacted new section 461(l), which generally limits an individual’s deductions for some business losses. For a tax provision that is expected to raise $150 billion of federal revenue over 10 years (more than global intangible low-taxed income (GILTI) or the base erosion and antiabuse tax (BEAT)), the loss limitation has not received much attention from commentators or Treasury.

This article discusses some issues with the limitation, including whether it applies to wages and (ironically) losses on the disposition of business property, its interaction with the section 199A passthrough business income deduction, and special considerations for trusts and estates.