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taxpayers that own applicable partner-
ship interests (APIs), commonly called ITEMS
carried interests, on filing requirements,
in accordance with Regs. Sec. 1.1061-6.
The FAQs provide further guidance
on final regulations issued in January
(T.D. 9945; see “Carried Interests
Regulations Are Finalized,” JofA, Jan. 8,
Inflation adjustments for 2022
2021).
Applicable partnership interests are
Annual revenue procedure updates amounts in 62 Code sections.
ownership interests in a partnership
that are transferred to an individual in
The IRS issued Rev. Proc. 2021-45, adjusting for inflation a wide array of
connection with that individual’s perfor-
amounts applicable to the 2022 tax year for use with individual, business, and
mance of substantial services in a trade
estate and trust returns and related tax issues. Amounts under 62 Code sections
or business of raising or returning capital
are updated.
and either (1) investing in or disposing
Some of the most common figures include the income tax tables for individu-
of securities and other specified assets
als and estates and trusts, generally with higher tax bracket thresholds than for
(or identifying specified assets for invest-
2021. For example, the bottom bracket for a single individual (other than heads
ing or disposition) or (2) developing
of household and surviving spouses), in which taxable income is subject to a 10%
specified assets (Sec. 1061(c)(2)).
tax, has a ceiling in 2022 of $10,275, an increase of $325 from the 2021 amount
Before enactment of Sec. 1061 by the
of $9,950.
law known as the Tax Cuts and Jobs Act,
Another frequently used amount, the standard deduction, is $12,950 for single
P.L. 115-97, gains from APIs gener-
taxpayers (and married individuals filing separate returns), $25,900 for married
ally were treated as long-term capital
taxpayers filing jointly, and $19,400 for heads of household, which for 2021 were
gains if held for at least one year. For
$12,550, $25,100, and $18,800, respectively.
tax years beginning after Dec. 31, 2017,
Sec. 1061 generally requires a three-year
holding period for gain allocated to an IRS makes 2022 inflation adjustments for retirement accounts
API to be eligible for long-term capital
gain treatment. 401(k) maximum contributions are higher; IRAs are unchanged.
The FAQs provide two sample work- The IRS issued Notice 2021-61 updating for 2022 dollar-amount ceilings and
sheets and instructions for passthrough thresholds for a wide range of qualified retirement plans and accounts, including
entities that have issued one or more traditional individual retirement arrangements (IRAs) and Roth IRAs. The notice
APIs and API holders, including owner also has the 2022 limits on elective deferrals for plans under Sec. 401(k) and Sec.
taxpayers, to use with returns filed after 403(b) and most plans under Sec. 457.
Dec. 31, 2021. A passthrough entity The limitation on deferrals for 401(k), 403(b), and most 457 plans is increased
that applies the final regulations for to $20,500 for 2022, up from $19,500 in 2021. The limitation on the annual
returns filed after Dec. 31, 2021, must benefit under a defined benefit plan under Sec. 415(b)(1)(A) is increased from
attach Worksheet A to an API holder’s $230,000 to $245,000. The limitation on the annual addition (employer and
Schedule K-1, Partner’s Share of Income, employee contributions and forfeitures) for defined contribution plans under Sec.
Deductions, Credits, etc., reporting the 415(c)(1)(A) is increased from $58,000 to $61,000.
passthrough entity’s API one-year
distributive share amount and API
three-year distributive share amount.
An API holder calculates the amount after Dec. 31, 2021, for a tax year of the two worksheets, in accordance
With respect to tax returns filed
IMAGE BY TURAC NOVRUZOVA/ISTOCK Worksheet B to determine the owner passthrough entities and taxpayers must — By Paul Bonner.
that is treated as short-term gain and
with instructions.
■
applies the final regulations using
News Release IR-2021-215
beginning before Jan. 19, 2021, certain
taxpayer’s recharacterization amount
disclose whether the information was
determined under the proposed regula-
and attaches it to the owner taxpayer’s
Paul Bonner can be reached at
tions (REG-107213-18) or another
return. The FAQs also describe how the
Paul.Bonner@aicpa-cima.com or
method. These entities and taxpayers
owner taxpayer reports these amounts on
Schedule D, Capital Gains and Losses.
journalofaccountancy.com must attach similar information to that 919-402-4434. ■ February 2022 | 35