IRC 199A – The New 20% Tax Deduction
Date : 12 December 2018
Time : 01 : 00 PM EST
Duration : 90 Minutes
Nick Preusch CPA, JD, LLM, is a tax manager with PBMares, LLP. Nick has participated in helping high wealth individual and large business entities with complex tax compliance, along with specializing in international, non-for-profit tax issues, and tax ethics issues.
Nick has also worked with the Internal Revenue Service as a Revenue Agent and an Attorney with the IRS Office of Professional Responsibility. Nick is a graduate of Carthage College with a BS in Accounting and Business, the University of Connecticut with an MA in Accounting, Case Western Reserve University with a JD, and Georgetown University with an LLM in taxation. Nick has also authored publications for the AICPA’s Journal of Accountancy, AICPA’s Tax Advisor, NATP’s Tax Pro Journal, and CCH’s Journal of Tax Practice and Procedure. He also co-authored a textbook, Tax Preparer Penalties, and Circular 230 Enforcement, published by Thomson Reuters. He has lectured nationally on topics such as ethics, complex tax transactions, and IRS practice and procedure.
Currently, Nick is an adjunct professor at the University of Mary Washington. Nick has been recognized as the Top 5 Under 35 CPAs in Virginia by the VSCPA in 2017, CPA Practice Advisor’s Top 40 Under 40 in 2018, and is a member of the VSCPA’s Tax Advisory Committee, and the AICPA’s Tax Practice and Responsibilities Committee.
Under the new Tax Cuts and Jobs Act, Congress created a new tax deduction equal to 20% of qualified business income. This new tax deduction is a great way to reduce taxes, however, the details of the law can be pretty confusing.
This webinar will first look at how to calculate the deduction at the various income levels as well as how to treat qualified REIT and PTP income as well. We will then cover the definition of trade or business, along with how self-rentals factor into the trade or business realm. Then, we will turn to the definition of qualified business income, what is included and not included in qualified business income. Finally, we will discuss disallowed prior year losses, net operating losses, IRC 481, IRC 707(c) and IRC 751 in relation to qualified business income.
The next topic will look in detail on the W-2 limitation calculation, as well as what is considered W-2 wages, the three methods to calculate W-2 wages, and how to allocated W-2 wages to multiple trades or businesses. We will look at certain rules for determining an unadjusted basis for transactions such as property held for a short period of time, like-kind exchanges and tax-free transactions. We will also consider how to allocate basis to different flow-through entities. We also will look at specified trades or businesses and cover examples of different specified trades or businesses, along with the new IRS de minimis rules and anti-abuse rules for these businesses.
The next section will look at loss carryover and how to calculate a carryover if qualified business income drops below $0. We will also look at the new aggregation rules that allow taxpayers to combined two or more trades or businesses for the purposes of calculating their IRC 199A deduction. Finally, we will cover several miscellaneous provisions in the tax law, such as self-employment taxes, net investment income tax, and alternative minimum tax and the impact IRC 199A has on those sections.
- IRC 199A – Calculation
- Qualified Business Income
- W-2 Wages
- Unadjusted Basis of Qualified Property
- Misc. Provisions of the Law
Course Level - Intermediate
Who Should Attend
CPA, Attorneys, small businesses.
Why Should Attend
The new tax law creates a lot of confusing provisions that require in-depth knowledge in order to properly file your taxes. The most confusing, but most beneficial is the new 20% tax deduction under IRC 199A.
The new tax law has several calculations for the 199A deduction based on the taxpayer’s taxable income. The calculation changes as taxable income increases. In addition, there are separate calculations for people who own certain types of businesses as well.
The law also has new definitions and new terms that most practitioners have never dealt with such as trade or business, qualified business income, relevant pass-through entity, and specified trade or business. We will go deep into all of these definitions for a thorough understanding of each topic.
There are also several miscellaneous provisions to look at like how to treat net operating loss, carryover rules for QBI, and aggregation. These are some of the more complex ideas in this new tax section that we will cover in-depth. With all the uncertainty and lack of familiarity using these new rules, it is really important that tax preparers and businesses that could qualify for this deduction obtain a good understanding of the rules. The IRS has also reduced the substantial understatement penalty to 5%, instead of 10% of proper tax owed for anything relating to this deduction, so getting the deduction incorrect could lead to increased penalties.
- Speaker: NICK PREUSCH
- Webinar Code: NICK-0001