Section 199A: Deduction for Qualified Business Income - Final Regulations

Description

This course will provide the practitioner with a detailed discussion and examples of the deduction for qualified business income under §199A introduced in the Tax Cuts and Jobs Act and modified by final regulations released January 18, 2019, and other guidance including Notice 2019-7. Rev. Proc. 2019-11, and additional proposed regulations. This provision will affect every business tax return, including S corporations and partnerships.

Objectives

• Describe who qualifies for the 20% deduction under §199A
• Describe the qualifications for the 20% deduction under §199A
• Describe the three categories of taxable income for the deduction under §199A
• Define a specified service business (SSB) and how the §199A deduction applies to a SSB
• Define a qualified trade or business (QTB)
• Illustrate the application of the §199A deduction to an S corporation and partnership (RPEs) and how the self rental rules create QBI from QTB
• Recognize a SSB and discuss the application of §199A for service-based businesses
• Calculate Qualified Business Income (QBI)
• Describe when the rental of property reported on Schedule E is eligible for the §199A deduction and using the safe harbor test of Notice 2019-7
• Calculate the deduction for the three categories of taxable income
• Describe the fracking rules
• Describe the effect of wages on the calculation of the §199A deduction and the three different methods available for determining wages under Rev. Proc. 2019-11
• Describe the effect of UBIA on the calculation of the §199A deduction, including UBIA for property contributed to a RPE, UBIA as an excess §743(b) basis adjustment, and calculating UBIA on property received in a like-kind exchange