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Tax Reform and Partnerships: What CPAs Need to Know in 2019

Changes in Pass-Through Rate, Active Loss Limitations, IRS Guidance on 199A, and More

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

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Conducted on Wednesday, January 23, 2019

Recorded event now available

This course will provide partnership tax advisers and compliance professionals with a recap of the practical impact of the 2017 tax legislation on partnerships and LLCs one year after its passage. The panel will detail the specific changes the new law made to pass-through income tax rates, carried interest, and loss limitation provisions; discuss the impact of other general business tax provision changes on partnership entities; and describe the relevant guidance issued by the IRS during 2018.

Description

The impact of the 2017 tax reform law on entities set up as partnerships for tax purposes is as acute as most observers predicted. The Act changed rates and loss allowances for most pass-through entities and created the highly complex Section 199A qualified business income (QBI) deduction. Tax advisers and compliance professionals continue to digest the planning implications and compliance challenges brought about by the new law.

The law altered the treatment of pass-through partnership income, specifically in the form of a 20% deduction for "qualified income" from a partnership, subject to wage limitations. Most professional service partnerships, such as attorneys and accountants, are not eligible to claim the deduction, which creates planning challenges and opportunities, particularly where these partnerships have lines of business income that would be eligible for the deduction.

In addition to the provisions specific to pass-through entities, the Act makes several changes that will impact many partnership businesses. The IRS issued proposed and temporary guidance for tax advisers on various components of the new law as applied to partnerships, but many open issues remain unresolved.

Listen as our experienced panel provides a recap of the partnership and LLC implications of the tax reform law and the resulting IRS guidance in its first year of operation.

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Outline

  1. Partnership and pass-through provisions and changes in new tax law
    1. New deduction on qualified business income
    2. Active loss limitations
    3. Extension of hold period on carried interest to three years
  2. Mechanics of new QBI deduction for pass-through entities
    1. W-2 wage test
    2. Separate business line determinations
    3. Determined at owner level
    4. Eligible pass-through income
  3. Other business provisions and changes that will impact partnerships and LLCs
    1. Business interest deduction limitation
    2. Changes to deferral treatment of like-kind exchanges
    3. Elimination of NOL carryback and extension of a carryforward period
  4. Planning steps in light of a Dec. 31, 2025, sunset provision

Benefits

The panel will address these and other relevant questions:

  • IRS proposed and temporary guidance on how the 20% deduction for qualified business pass-through income works
  • Critical provisions and changes in the new tax reform law for partnerships and LLCs
  • How changes to other business tax provisions impacted partnerships and other pass-through entities
  • Discussion of interest and loss limitations
  • Planning considerations in light of Dec. 31, 2025, sunset provision

Faculty

Barnett, Robert
Robert S. Barnett, JD, MS (Taxation), CPA
Partner
Capell Barnett Matalon & Schoenfeld

Mr. Barnett’s practice is highly concentrated in the areas of taxation, trusts, estates, corporate and...  |  Read More

Lovett, Brian
Brian T. Lovett, CPA, JD
Partner
Withum Smith+Brown

Mr. Lovett has extensive experience serving the tax needs of both public companies and closely-held businesses,...  |  Read More