SECTION 7. MODIFICATION OF

REVENUE PROCEDURE 2019-11

.01 Revenue Procedure 2019-11 provides methods for calculating W-2 wages, as defined in section 199A(b)(4) and § 1.199A-2, for purposes of determining the deduction for qualified business income under section 199A(a)(1). Section 6 of Rev. Proc. 2019-11 provides a method for determining W-2 wage in the case of a taxpayer with a short taxable year. Specifically, section 6.01 of Rev. Proc. 2019-11

provides that for purposes of determining W-2 wages in the case of a taxpayer with a short taxable year, “the W-2 wages of a taxpayer with a short taxable year shall be determined under the tracking wages method described in section 5.03 of this revenue procedure.”

.02 Under the tracking wages method in section 5.03 of Rev. Proc. 2019-11, W-2 wages are calculated by totaling the amounts of wages subject to Federal income tax withholding that are paid to employees of the taxpayer for employment by the taxpayer and that are reported on Forms W-2 filed with SSA by the taxpayer for the calendar year and adding to this amount the total of the amounts that are reported in Box 12 of Forms W-2 with respect to employees of the taxpayer for employment by the taxpayer and that are properly coded D, E, F, G, and S. Section 6.02(A) of Rev. Proc. 2019-11 further provides that, in applying the tracking wages method in the case of a short taxable year, “the total amount of wages subject to Federal income tax withholding and reported on Form W-2 must include only those wages subject to Federal income tax withholding that are actually or constructively paid to employees during the short taxable year and reported on Form W-2 for the calendar year ending with or within that short taxable year (or, for a short taxable year that does not contain a calendar year ending with or within such short taxable year, wages subject to federal income tax withholding that are actually or constructively paid to employees during the short taxable year and reported on Form W-2 for the calendar year containing such short taxable year).”

.03 Under section 6.02(A) of Rev. Proc. 2019-11, taxpayers with a short taxable year containing, but not ending on, December 31 can include only W-2 wages actually or constructively paid during the portion of the short taxable year in the calendar year ending on December 31 and cannot include the W-2 wages actually or constructively paid during the portion of the short taxable year that falls within the following calendar year. Section 6 of this revenue procedure, which similarly addresses calculating W-2 wages for taxpayers with a short taxable year, addresses this issue by providing that, for

purposes of section 5.03 of this revenue procedure (which parallels section 5.03 of Rev. Proc. 2019-11), the total amount of wages subject to Federal income tax withholding and reported on Form W-2 includes wages subject to Federal income tax withholding that are actually or constructively paid to employees during the short taxable year and reported on Form(s) W-2 for any calendar year(s) containing any day within that short tax- able year . In addition, section 6.02 of this revenue procedure provides that a Specified Cooperative may include in W-2 wages for the short taxable year any wages paid during the short taxable year that are otherwise includable as W-2 wages except that they have not been reported on Forms W-2 because the Forms W-2 on which those wages must be reported are not yet due, but only if such wages are properly included in a Form W-2 filed with the SSA on or before the 60th day after the due date (including extensions) for such return.

.04 This revenue procedure modifies Rev. Proc. 2019-11 so that taxpayers with a short taxable year containing, but not ending on, December 31 can include all wages actually or constructively paid during the short taxable year, and so that the provision in section 6 of Rev. Proc. 2019-11 concerning the calculation of W-2 wages for taxpayers with short taxable years is consistent with the similar provision in section 6 of this revenue procedure.

.05 Accordingly, section 6.02 of Rev. Proc. 2019-11 is modified to read as follows:

.02 Method required for a short tax- able year and modifications required in application of method. The W-2 wages of a taxpayer with a short taxable year shall be determined under the tracking wages method described in section 5.03 of this revenue procedure. In applying the tracking wages method in the case of a short taxable year, the taxpayer must apply the method as follows—

(A) For purposes of section 5.03(A) of this revenue procedure, the total amount of wages subject to Federal income tax withholding and reported on Form W-2 must include only those wages subject to Federal income tax withholding that are actually or constructively paid to employ

February 8, 2021 836 Bulletin No. 2021–6

ees during the short taxable year and reported on Form(s) W-2 for any calendar year(s) containing any day within that short taxable year;

(B) For purposes of section 5.03(B) of this revenue procedure, only the portion of the total amounts reported in Box 12, Codes D, E, F, G, or S on Forms W-2, that are actually deferred or contributed during the short taxable year are included in W-2 wages; and

(C) For purposes of this section 6.02, if, at the time of the filing of the taxpayer’s income tax return, the taxpayer has paid wages during the short taxable year that are reportable but not yet reported as W-2 wages in a Form W-2 filed with the Social Security Administration (SSA), then the taxpayer may still include those

wages as W-2 wages for the short taxable year, but only if such wages are properly included in a Form W-2 filed with the SSA on or before the 60th day after the due date (including extensions) for such return.