SECTION 5. METHODS FOR

CALCULATING W–2 WAGES

For any taxable year, a taxpayer generally must calculate W–2 wages for purposes of § 199(b)(1) using one of the three methods described in section 5.01, 5.02, and 5.03 of this revenue procedure. These three methods are subject to the non-duplication rule provided in § 1.199–2(d). For a taxpayer with a short taxable year, see Section 6 of this revenue procedure. In calculating W–2 wages for a taxable year under the methods below, the taxpayer includes only Forms W–2 that are for the calendar year ending with or within the taxable year of the taxpayer and that meet the rules of application described in section 3 of this revenue procedure.

.01 Unmodified box method . Under the unmodified box method, W–2 wages are calculated by taking, without modification, the lesser of—

filed with SSA on or before the 60th day after the due date (including extensions) of the Form W–2 (or to correct a Form W–2c relating to a Form W–2 that had not been filed with SSA on or before the 60th day after the due date (including extensions) of the Form W–2), then such Form W–2c (or corrected return) shall not be considered to have been filed with SSA on or before the 60th day after the due date (including extensions) for such Form W–2c (or corrected return), regardless of when such Form W–2c (or corrected return) is filed. See § 1.199–2(a)(3) of the regulations for further guidance related to this requirement.

.04 No application in determining whether amounts are wages for employ- ment tax purposes . The discussions of “wages” in this revenue procedure and in the regulations under § 199 are for purposes of § 199 only and have no application in determining whether amounts are wages under § 3121(a) for purposes of the Federal Insurance Contributions Act, under § 3306(b) for purposes of the Federal Unemployment Tax Act, and under § 3401(a) for purposes of the Collection of Income Tax at Source on Wages (federal income tax withholding), or any other wage-related determination. See § 1.199–2(a)(1) of the regulations.

.05 Application for a taxpayer with a short taxable year . Subject to the other rules of application of the regulations and of this revenue procedure, the W–2 wages of the taxpayer for a short taxable year shall include those wages paid during the short taxable year to employees of the taxpayer as determined under the tracking wages method described in section 5.03 of this revenue procedure. See section 6 of this revenue procedure.

.06 Acquisition or disposition of a trade or business (or major portion) . Section 1.199–2(c) of the regulations provides that if a taxpayer (a successor) acquires a trade or business, the major portion of a trade or business, or the major portion of a separate unit of a trade or business from another taxpayer (a predecessor), then, for purposes of computing the respective § 199 deduction of the successor and of the predecessor, the W–2 wages paid for that calendar year shall be allocated between the successor and the predecessor based on whether the wages are for employment by the successor or for employment by the

predecessor. Thus, in this situation, the W–2 wages are allocated based on whether the wages are for employment for a period during which the employee was employed by the predecessor or for employment for a period during which the employee was employed by the successor, regardless of which permissible method for Form W–2 reporting is used.

.07 Non-duplication rule . Section 1.199–2(d) of the regulations provides that amounts that are treated as W–2 wages for a taxable year under any method of calculating W–2 wages shall not be treated as W–2 wages for any other taxable year. Thus, for example, an amount of nonqualified deferred compensation that is treated as W–2 wages under the Unmodified Box Method described in section 5.01 of this revenue procedure shall not be treated as W–2 wages in any other taxable year. Section 1.199–2(d) of the regulations also provides that an amount shall not be treated as W–2 wages by more than one taxpayer.

.08 Trade or business requirement . Pursuant to § 1.199–8(c)(1), the term W–2 wages only includes those wages paid to employees of the taxpayer that are attributable to the actual conduct of a trade or business of the taxpayer. For example, remuneration paid to an employee for domestic service performed in the private home of the taxpayer is not included in W–2 wages of the taxpayer.