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New Section 199A Qualified Business Income Regulations: Definitions, Thresholds, Exclusions and Calculations

Planning Opportunities and Anti-Abuse Provisions in the New Rules

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, October 18, 2018

Recorded event now available

This course will provide partnership tax advisers and compliance professionals with an in-depth guide to the Service’s recent Section 199A Qualified Business Income (QBI) deduction regulations. The panel will offer particular focus on the aggregation rules, the definitions of specified services, anti-abuse rules, and W-2 wage calculations in determining the eligible QBI pass-through deduction. The webinar will also offer planning tools for pass-through entities to restructure business activities to qualify for the deduction.

Description

On Aug. 8, 2018, the IRS released long-awaited proposed regulations offering guidance on the Section 199A deduction for QBI from pass-through entities. While the regulations are generally taxpayer-friendly, they contain strict anti-abuse provisions that tax advisers must be aware of to avoid costly tax consequences.

The proposed regs offer important details on definitions, activity groupings and carryover rules. The guidance also narrows the list of “Specified Service Trades or Businesses” (SSTB) entities ineligible to claim the deduction, and offers clarification on applying W-2 wage limitations to calculate the deduction.

The regulations restrict the use of “crack and pack” structures through which ineligible businesses attempt to separate business activities into separate entities to try to claim the deduction on addresses. The guidance contains examples throughout to illustrate identification of ineligible entities and activities, as well as offering help on calculations. The Service states that taxpayers may rely on the guidance in the proposed regulations.

Listen as our expert panel provides practical guidance on the impact of the new proposed Section 199A regulations, and how to design tax strategies to plan with and around the definitions and thresholds contained in the new rules.

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Outline

  1. Section 199A deduction defined
  2. Structure of proposed regulations REG-107892-18
    1. Definitions
    2. Calculation guidance
    3. Clarifications on SSTBs
    4. Threshold amounts
    5. Aggregation rules
    6. Anti-abuse provisions
  3. Notice 2018-64 Methods for Calculating W-2 Wages for Purposes of Section 199A
  4. Using the examples for calculation guidance
  5. Planning opportunities to maximize deductions through aggregating business activities

Benefits

The panel will discuss these and other important topics connected to the new proposed regulations:

  • Explaining the defined terms, including trade or business, Qualified Business Income, relevant pass-through entity, specified sesrvice trade or B\business, and unadjusted basis immediately after acquisition
  • Reviewing the impact of the proposed regs on financial and brokerage services, consultants and other specified groups
  • Highlighting the insights available from the examples contained in the proposed regs
  • Summarizing the planning opportunities presented by the proposed regulations

Faculty

Lehn, David
David M. Lehn
Partner
Withersworldwide

Mr. Lehn is a partner in the private client and tax team. He has extensive experience in federal and state income,...  |  Read More

Levine, Richard
Richard S. LeVine
Special Counsel
Withersworldwide

Mr. LeVine's practice focuses on cross-border estate, gift and income tax planning for owners of privately held...  |  Read More