Trade or Business Determinations: Interpreting Varying Guidance for Real Estate, Family Offices, 199A, 163(j)

Whether an activity is a trade or business is a critical tax determination in multiple areas. Trade or business is a term that is not defined in the Internal Revenue Code or the regulations. What constitutes a trade or business and the facts and circumstances contributing to the determination varies depending on the applicable tax situation. Most familiar may be Section 162(a), which states, "There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business" but provides no definition of a trade or business.

Most troublesome could be the determination for real property, which relies on Section 469(c)(7)(C), "'real property trade or business' means any real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage trade or business." Although this section and the related regulations include the term trade or business, a concrete definition is not provided.

In addition to being able to deduct ordinary and necessary expenses, taxpayers wishing to qualify for the 20 percent deduction under 199A, calculate 163(j) limitations, or deduct expenses for a trade or business must all be sure their level of activity rises to that of a trade or business. Practitioners must rely on court cases, legislative history, and facts and circumstances to make these determinations.

Listen as our panel of federal income tax experts compares and contrasts the multiple interpretations of what constitutes a trade or business throughout the IRC.

1. Trade or business determinations: introduction
2. Real estate
3. Investment management
4. 199A
5. Other applications
6. Separating and aggregating activities
7. Relative cases

The panel will review these and other critical issues:

• Recent and relative cases related to trade or business determinations
• Best practices for deciding and documenting a trade or business determination
• How real estate activity qualifies as a trade or business
• Steps taxpayers can take in specific areas to better qualify as a trade or business
• Differences in trade or business determinations throughout the Internal Revenue Code

Learning Objectives

After completing this course, you will be able to:

• Identify key factors that contribute to qualifying as a trade or business in specific tax situations
• Determine how related court cases affect the evolving definition of a trade or business
• Decide how the trade or business determination affects qualification for the 199A deduction
• Ascertain key distinctions between real estate trade or businesses and passive activities

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and their respective partners and shareholders.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).