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Tax Treatment of Real Estate Dealers, Investors, and Professionals

Capital Gains vs. Ordinary Income Treatment, Opportunity Zones and 199A

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

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Conducted on Wednesday, February 1, 2023

Recorded event now available

or call 1-800-926-7926

This course will cover the differences between real estate dealers, investors, and professionals, as well as the tax consequences of each classification. The panel will cover the current IRS challenges, the 199A deduction, and investing in opportunity zones for real estate ventures.

Description

Classification of taxpayers working in the real estate business continues to be one of the most hotly litigated areas of taxation. Taxpayers want dealer status when sales result in losses in order to benefit from ordinary deductions and investor status when sales result in gains to benefit from capital gains treatment.

Unfortunately, determining into which category a real estate sale falls is a facts and circumstances determination based primarily on case law. Property held primarily for sale in the ordinary course of business may lead to a dealer classification producing ordinary income, while the same piece of property, if held to benefit from its appreciation over time, could be considered an investment.

These considerations, along with new real estate quandaries leave advisers to real estate investors, dealers, and professionals struggling. Taxpayers may now want to be a trade or business to benefit from the generous 20 percent deduction under 199A.

At the same time, taxpayers may not want to be in the active trade of developing real estate if they want to benefit from the tax savings provided by opportunity zones. Determining and reconciling the benefits and drawbacks of each real estate classification is critical for tax professionals advising taxpayers selling real estate.

Listen as our panel of experts details the criteria for determining each real estate classification, how to advise clients to obtain the most beneficial designation, and how to benefit from tax savings opportunities as investors, dealers, and professionals working with real estate after tax reform.

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Outline

  1. Dealers
  2. Investors
  3. Professionals
  4. 199A and real estate classifications
  5. Opportunity zones and real estate classifications
  6. Challenges to classifications

Benefits

The panel will review these and other important issues:

  • The tax consequences of the classification of real estate sales
  • Primary factors the IRS considers when classifying real estate deals
  • Steps to take to obtain the desired classification
  • The current state of IRS challenges to dealer and investor status
  • When a real estate professional can benefit from 199A

Faculty

Capdevielle, Cliff
Cliff A. Capdevielle
Director, Trusts and Estates Tax Services
MOBO Law

Mr. Capdevielle helps clients navigate the complex opportunities related to tax planning, business succession planning,...  |  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

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