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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Real Property - Finance

Date & Time
  • event Date

    Tuesday, November 8, 2022

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will provide counsel with tools to structure real estate transactions to take full advantage of the qualified business income (QBI) deduction under IRC 199A. The panel will discuss the requirements and limitations of 199A, the follow-up IRS regulations for 199A, and planning techniques to maximize tax savings for pass-through entities.

Faculty

Joseph C. Mandarino
Partner
Smith Gambrell Russell

Mr. Mandarino's practice focuses on corporate, tax and finance law. He is involved with a wide variety of businesses and transactions, including experience with compliance, planning and M&A activities for partnerships, individuals and corporations. Mr. Mandarino’s practice also includes representation in tax controversy work. He writes and speaks extensively on a wide range of business, tax and finance topics.

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Ajay Gupta
Of Counsel
Moore Tax Law Group, LLC

Mr. Gupta is a tax litigation and criminal defense attorney with extensive private practice, government, and adjunct teaching experience. At large and small law firms in California, he managed complex business litigation at trial and appeal stages. As a Special Assistant U.S. Attorney in the Northern District of Georgia, Mr. Gupta prosecuted violent and white-collar crimes. As an Attorney-Adviser at the U.S. Tax Court in Washington, D.C., he supported judicial review and resolution of deficiency redetermination, collection due process, and whistleblower actions. As Adjunct Professor of Law at DePaul, Chicago-Kent, and U. of Houston law schools, Mr. Gupta teaches civil and criminal tax litigation courses. Many of his publications have been cited in court opinions, journals, and treatises.

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Description

One of the most significant features of the 2017 tax reform is the 20 percent deduction available to non-corporate taxpayers for their QBI. As pass-through entities are the vehicles of choice for real estate transactions in the U.S., the QBI deduction as codified under IRC 199A represents a real opportunity for the industry.

Section 199A generally limits the deduction attributable to a pass-through business to the greater of: (1) 50 percent of the individual's W-2 wages paid concerning the qualified trade or business, or (2) the sum of 25 percent of such W-2 wages plus 2.5 percent of the tax basis immediately after it acquires the business' qualified property.

Rental income must be "effectively connected" with a U.S. trade or business as defined in IRC 864(c). Whether or not income such as rent is "effectively connected" depends on whether the income derives from assets used in the business (asset use test) and whether the activities of the company are a material factor in realizing the income (business activities test).

Real estate counsel must thoroughly understand 199A and its limitations when advising on entity structures and operations. Determination of a real estate entity's eligibility for the deduction and any actions needed to maximize the deduction should be made at the deal structuring stage.

Listen as our panel analyzes the potential tax benefits and limitations of 199A in real estate transactions and outlines tax planning strategies to take advantage of the QBI deductions for real estate owner-operators.

Outline

  1. Requirements of 199A and accompanying regulations
  2. Non-corporate entities that benefit from 199A: pass-through entities, REITs
  3. Defining QBI: rental and other business income
  4. Claiming the 199A deduction on individual returns
  5. Limitations on certain types of businesses or services
  6. Tax planning considerations

Benefits

The panel will review these and other relevant issues:

  • What are the potential tax benefits of 199A?
  • What are the entity requirements for claiming the deduction?
  • What is QBI, and how is it calculated?
  • When can rental income be treated as QBI?
  • What are tax pitfalls to consider when reforming an entity to take advantage of 199A?