Guaranteed Payments Under IRC 199A Regulations: Year-End Strategies to Maximize QBI Benefits
Restructuring Section 707 Payments to Partners Through Priority Allocations, Using Lower Tier Partnerships
Recording of a 110-minute CPE webinar with Q&A
This course will provide partnership tax advisers with a practical exploration of the impact of the Section 199A Qualified Business Income (QBI) deduction on the tax treatment of guaranteed payments to partners for services. The panel will discuss the default treatment of payments for services to a partner under Section 707, and how the W-2 wage limitation for QBI calculations can make a guaranteed payment disadvantageous to the partnership as well as the receiving partner. The webinar will also provide concrete strategies for structuring payments to service provider partners so that the payments can fit into the QBI calculations.
Outline
- Structure of Section 707 payments
- 707(a) provisions
- 707(c) payments for services provided outside the scope of the role as a member
- Tax treatment before enactment of 707(a)
- QBI W-2 wage limitations under Section 199A
- Proposed regulations and IRS position on the treatment of guaranteed payments for QBI calculation purposes
- Using priority allocations to compensate partners for capital or services outside the scope of his role as a partner
- Using lower-tier partnerships to pay W-2 wages to partner instead of guaranteed payments
Benefits
The panel will discuss these and other important issues:
- How Section 199A regulations make guaranteed payments no longer a viable compensation strategy for partnerships
- Implications to partnerships, recipient partners and remaining partners of using priority allocations instead of guaranteed payments
- How to structure a lower tier partnership to pay W-2 wages to service-provider partners to apply those payments to the upper tier partnership’s QBI W-2 wage limitation calculations
Faculty
Olga A. Loy
Partner
Winston & Strawn
Ms. Loy represents funds and fund sponsors in structuring, negotiating, and forming private equity and venture capital... | Read More
Ms. Loy represents funds and fund sponsors in structuring, negotiating, and forming private equity and venture capital funds. She plans and structures other complex business transactions, including corporate mergers and acquisitions, leveraged buyouts, recapitalizations, and venture capital investments. Furthermore, she counsels investment advisers, hedge funds, registered investment companies, and broker-dealers across a wide range of investment management, securities, and general corporate matters. She represents large and mid-size private equity funds and their management companies. She also advises real estate funds and investors in tax structuring matters, including REIT counsel and planning and cross-border analysis.
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Joseph C. Mandarino
Partner
Smith Gambrell & Russell
Mr. Mandarino's practice focuses on corporate, tax and finance law. He is involved with a wide variety of... | Read More
Mr. Mandarino's practice focuses on corporate, tax and finance law. He is involved with a wide variety of businesses and transactions, including experience with compliance, planning and M&A activities for partnerships, individuals and corporations. Mr. Mandarino’s practice also includes representation in tax controversy work. He writes and speaks extensively on a wide range of business, tax and finance topics.
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T. Justin Trapp
Atty
Winston & Strawn
Mr. Trapp was elected to the order of the Coif, received the Rickert Award, and served as a law review editor while... | Read More
Mr. Trapp was elected to the order of the Coif, received the Rickert Award, and served as a law review editor while attending The University of Illinois College of Law. He now focuses his practice on tax matters.
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Ruth M. Wimer
Partner
Winston & Strawn
Ms. Wimer is an attorney and a CPA with nearly 30 years of experience previously serving as a senior partner in the... | Read More
Ms. Wimer is an attorney and a CPA with nearly 30 years of experience previously serving as a senior partner in the national tax department of a Big Four accounting firm. She has extensive experience advising clients on complex compensation tax issues, including reporting and withholding and also advises on large deduction timing issues in connection with mergers and acquisitions. Ms. Wilmer’s practice includes structuring optimum ownership of private aircraft and business jets, factoring in deduction and income inclusion for personal use, excise tax, depreciation, SEC, Standard Industry Fare Level, and FAA issues. She frequently resolves a gamut of compensation issues such as employment taxes, stock options, Section 162(m), Section 83, deduction limitations, the entertainment disallowance, and a wide variety of fringe benefits, including health insurance.
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