New Section 199A Qualified Business Income Regulations: Definitions, Thresholds, Exclusions and Calculations

On Aug. 8, 2018, the IRS released long-awaited proposed regulations offering guidance on the Section 199A deduction for QBI from pass-through entities. While the regulations are generally taxpayer-friendly, they contain strict anti-abuse provisions that tax advisers must be aware of to avoid costly tax consequences.

The proposed regs offer important details on definitions, activity groupings and carryover rules. The guidance also narrows the list of “Specified Service Trades or Businesses” (SSTB) entities ineligible to claim the deduction, and offers clarification on applying W-2 wage limitations to calculate the deduction.

The regulations restrict the use of “crack and pack” structures through which ineligible businesses attempt to separate business activities into separate entities to try to claim the deduction on addresses. The guidance contains examples throughout to illustrate identification of ineligible entities and activities, as well as offering help on calculations. The Service states that taxpayers may rely on the guidance in the proposed regulations.

Listen as our expert panel provides practical guidance on the impact of the new proposed Section 199A regulations, and how to design tax strategies to plan with and around the definitions and thresholds contained in the new rules.

1. Section 199A deduction defined
2. Structure of proposed regulations REG-107892-18
   1. Definitions
   2. Calculation guidance
   3. Clarifications on SSTBs
   4. Threshold amounts
   5. Aggregation rules
   6. Anti-abuse provisions
3. Notice 2018-64 Methods for Calculating W-2 Wages for Purposes of Section 199A
4. Using the examples for calculation guidance
5. Planning opportunities to maximize deductions through aggregating business activities

The panel will discuss these and other important topics connected to the new proposed regulations:

Learning Objectives

After completing this course, you will be able to:

• Recognize opportunities to include or exclude business interests in the process of aggregating business interests
• Differentiate treatment of assets vs. interests acquired by estates
• Identify the clarifications the proposed regs provide in defining SSTBs for purposes of determining whether an activity is eligible to claim the Section 199A deduction
• Discern the impact and treatment of losses, including unrecognized losses

• 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 at mid-level within the organization, preparing complex tax forms and schedules; supervisory authority over other preparers/accountants. Specific knowledge and understanding of partnership tax rules, corporate structure, and partnership audit regulations.

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IRS Approved Provider

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