Owners of S corporations and partnerships are subject to numerous limitations on pass-through losses, each with unique rules, applications and complexities. With the increase in popularity of pass-through business entities, it is essential for CPAs to understand the complexities and interactions of these pass-through loss limitations.
Section 199A is easily the least understood topic of The Tax Cuts and Jobs Act. Your clients will look to you for explanations and best practices to maximize the 20% deduction. Pass-through entities and real estate investors stand to gain valuable tax cuts, and the average practitioner cannot afford to be uninformed on Section 199A. This course will cover all relevant facets and nuances of the deduction and enable implementation for tax returns. This program will include all IRS-issued guidance.
DESIGNED FOR
Practitioners wishing to understand and apply the §199A deduction.
BENEFITS
- Analyze how basis in an ownership interest in a pass-through entity is established
- Discuss how activity of the entity, distributions and optional adjustments increase or decrease basis
- Discuss when basis is "at-risk" under section 465 and the resulting loss disallowance and carryforward related to basis that is not at-risk
- Define passive activities under section 469 and exceptions to the passive loss rules
- Discuss when and how aggregation of activities should be used to avoid the passive loss rules
- Analyze new section 461(l) created by the Tax Cuts and Jobs Act of 2017 and understand the limitation calculation and resulting carryforward
- Analyze the hierarchy of the loss limitations with examples of the application of the four tiers of losses and how they interact
- Understand how the 20 percent deduction for pass-through entity owners works
- Implement the benefits of this deduction for income tax returns
HIGHLIGHTS
- Tier 1: Basis limitations for S corporation shareholders and partners
- Tier 2: Section 465 at-risk limitations for S corporation shareholders and partners, including the impact of debt, indemnities, guarantees and shareholder/partner agreements
- Tier 3: Section 469 passive loss limitations and exceptions to the limitations
- Tier 4: The new excess business loss limitation of the Tax Cuts and Jobs Act of 2017 (new section 461(l))
- Latest guidance issued by the IRS, whether by way of regulations or administrative announcements
- What happens when the taxpayer owns multiple entities; aggregation rules
- Calculating qualified business income (QBI)
- How to identify a specified service trade or business
- Taxable income limits on specified service trade or businesses
- Maximizing the 20% deduction for pass-through entities and Schedule Cs
- What happens if QBI for a given year is negative?
- Whether a tax entity offers a greater Section 199A deduction
- Whether the owner of a Schedule E with net rental income can claim the Section 199A deduction
COURSE LEVEL
Intermediate
PREREQUISITES
Basic familiarity with loss allowance rules of pass-through entities. A basic understanding of the federal tax rules relating to individuals and businesses.
ADVANCE PREPARATION
None
ADDITIONAL NOTES
- This seminar qualifies for 4 CFP credits.
- This seminar qualifies for IRS credit.
Course materials are distributed electronically and we’ve passed the savings along to you - registrants save $20 on all 8-hour seminar pricing. To access the materials visit My Events. Download to your laptop or tablet prior to the seminar, handouts are added as received.
Help Feed Those in Need- The NJCPA Emerging Leaders Council is hosting a Food Drive to benefit the Community FoodBank of New Jersey. Please bring your nonperishable items and canned goods to this event. Peanut butter and tuna fish are always needed.