The IRS issued a long-awaited safe harbor for when real estate rental qualifies as a trade or business for purposes of the 20% deduction for qualified business income under IRC § 199A. We will review the rules for rental under Code § 199A and explain how the new safe harbor fits into the framework. We will explore a smattering of recent developments in partnership tax, such as final regulations discussing employee vs. partner in tiered structures, the nature of interest expense when a partnership interest changes hands, and the effect of changes on inside basis when an interest in a tiered structure changes hands. Finally, we will discuss the income taxation of intellectual property and other intangibles in light of 2017 tax reform.
You will learn:
- Strategy for qualifying real estate rental as a trade or business under IRC § 199A independent of the safe harbor.
- How the new safe harbor for real estate changed from its proposed terms and the extent to which the safe harbor helps.
- How recently finalized regulations treat compensatory payments from disregarded entities to partners in the parent partnership.
- What those regulations intentionally did not address that provide opportunities for tiered partnership structures.
- How to determine the deductibility of interest expense incurred by a partnership and how distributions from a partnership affect that determination.
- A taxpayer victory regarding how that determination changes when a partnership interest changes hands.
- How inside basis adjustments flow inside tiered partnerships.
- A new TAM that may expand the types of transfers that can trigger inside basis adjustments.
- How 2017 tax law changes curtailed favorable treatment on the sale of intellectual property.
- How the treatment of goodwill, etc. differs from the above treatment, which may inform strategies for allocating purchase price or structuring a purchase.
About the Speaker
Steve is a nationally recognized practitioner in the areas of estate planning and the structuring of privately held businesses. Lawyers, accountants and business owners regularly look to Steve for fresh, highly knowledgeable insights into the best possible tax and estate planning approaches to their transactions.
Steve crafts estate plans for individuals, keeping in mind their financial security and desire to save income and estate tax. In his work for businesses, Steve helps owners plan for the eventual sale (to co-owners, employees, or third parties)or transfer (to family members), and provides a legal framework for an orderly transition while strategically saving income, transfer, and FICA taxes.
Drawing on his background as an accountant - and his still-current CPA license and Chartered Global Management Accountant credential - Steve structures businesses to achieve business objectives and save income or estate tax. He has helped fledgling businesses organize, thriving businesses restructure to save hundreds of thousands of dollars of income tax when planning a transition to the next ownership group, and mature multi-million or billion-dollar businesses plan tax-saving transfers to the next generation.
Steve is a highly visible member of the ABA's Real Property, Trust & Estate Law Section and the American College of Trust & Estate Counsel, which regularly directs its members to Steve's quarterly newsletter. He has represented both groups in comments to the IRS, the U.S. Treasury, and tax lawmakers.
Click here to read Steve's full biography.