The IRS correctly limited the amount of wages a company can use to claim a newer tax credit enacted under the Tax Cuts and Jobs Act in 2017, a majority of the US Tax Court said in a precedent-setting opinion.
The Tax Court sided with the IRS in determining the tax deduction two Washington State-based cannabis companies can claim under IRC Section 199A is limited by Section 280E, which restricts tax credits for businesses engaged in a trade considered illegal in a certain state.
The court read deeply into the code’s use of the term “properly allocable,” which is ...