Grain Glitch Fixed and Partnership Audit Rules Modified in Consolidated Appropriations Act, 2018

Congress passed and the President has signed the Consolidated Appropriations Act, 2018 which contained the much discussed fix the for “grain glitch,” technical corrections related to the consolidated partnership audit regime and various other technical corrections in its 2,232 pages.

For those who don’t want to read the entire thing, the tax provisions begin on page 2,033, the technical corrections begin at page 2,057 and the corrections to the partnership audit rules begin at page 2,089.

Given the time of year I won’t have time to go through this bill in detail (that’s a post-April 17 project since at some of my clients would like to file without going on extension) and I expect most of you also won’t have time to read a detailed outline.

Some quick points are appropriate:

  • The farmer-owned cooperative provisions found in the original version of IRC §199A have been removed from the bill and a whole new IRC §199A(g) has been put in place of them.  The new provision effectively puts the old §199 regime back in place for cooperatives.  The special 20% deduction for patronage dividends also was removed from IRC §199A.
  • The partnership technical corrections are similar to what had been proposed back at the end of 2016 but which Congress never got around to passing.  While the proposed regulations largely assumed these changes would be made, those regulations will still need to be revised to take fully into account these changes.  For that reason, expect the final regulations to be delayed yet again and likely a brand new set of proposed regulations will need to be issued.

Here are materials related to the bill: