Tax Treatment of Real Estate Dealers, Investors, and Professionals

Classification of taxpayers working in the real estate business continues to be one of the most hotly litigated areas of taxation. Taxpayers want dealer status when sales result in losses in order to benefit from ordinary deductions and investor status when sales result in gains to benefit from capital gains treatment.

Unfortunately, determining into which category a real estate sale falls is a facts and circumstances determination based primarily on case law. Property held primarily for sale in the ordinary course of business may lead to a dealer classification producing ordinary income, while the same piece of property, if held to benefit from its appreciation over time, could be considered an investment.

These considerations, along with new real estate quandaries leave advisers to real estate investors, dealers, and professionals struggling. Taxpayers may now want to be a trade or business to benefit from the generous 20 percent deduction under 199A.

At the same time, taxpayers may not want to be in the active trade of developing real estate if they want to benefit from the tax savings provided by opportunity zones. Determining and reconciling the benefits and drawbacks of each real estate classification is critical for tax professionals advising taxpayers selling real estate.

Listen as our panel of experts details the criteria for determining each real estate classification, how to advise clients to obtain the most beneficial designation, and how to benefit from tax savings opportunities as investors, dealers, and professionals working with real estate after tax reform.

1. Dealers
2. Investors
3. Professionals
4. 199A and real estate classifications
5. Opportunity zones and real estate classifications
6. Challenges to classifications

The panel will review these and other important issues:

• The tax consequences of the classification of real estate sales
• Primary factors the IRS considers when classifying real estate deals
• Steps to take to obtain the desired classification
• The current state of IRS challenges to dealer and investor status
• When a real estate professional can benefit from 199A

Learning Objectives

After completing this course, you will be able to:

• Determine whether real estate qualifies under 199A
• Identify when taxpayers may benefit from investor treatment
• Decide how real estate sales are taxed
• Ascertain tax differences between dealers and investors

• 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 sole proprietorships, qualified business income, net operating losses and loss limitations; familiarity with net operating loss carry-backs, carry-forwards and carried interests.

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).