Asset Acquisition Rules for Section 199A: Avoiding QBI Limitations by Increasing UBIA

A live 110-minute CPE webinar with interactive Q&A


Wednesday, January 22, 2020

1:00pm-2:50pm EST, 10:00am-11:50am PST

Early Registration Discount Deadline, Friday, January 10, 2020

or call 1-800-926-7926

This webinar will provide tax advisers to pass-through entities with a deep dive into the challenges and opportunities of the unadjusted basis of qualified property immediately after acquisition (UBIA) limitations to claiming the Section 199A Qualified Business Income (QBI) deduction. The panel will discuss how to calculate the UBIA of qualified property and describe how to handle special situations such as like-kind exchanges and the Section 754 election. The webinar will also offer strategies for increasing the UBIA of qualified property to maximize the QBI deduction available.

Description

199A provided a generous 20% deduction for eligible taxpayers and new ponderings for tax professionals and business owners. The deductible amount is the lesser of 20% of QBI or the greater of 50% of wages or 25% of wages plus 2.5% of the UBIA. First, advisers must determine which taxpayers can benefit from a review of UBIA assets. Once identified, it follows that maximizing UBIA can increase the 20% deduction and that astute tax professionals have devised steps to do just this.

Generally speaking, UBIA is a property's original basis, without regard to depreciation. There are, however, more considerations than the price paid. The asset must be held and available for use in the trade or business at the close of the taxable year and must not be beyond the depreciable period for UBIA. Understanding what qualifies as UBIA is key to calculating the 20% deduction for applicable taxpayers.

For taxpayers identified as benefiting from the UBIA calculation, the calculation of the wage limitation is still applicable. Knowing what to include and maximizing the 25% of compensation along with UBIA optimizes the 20% QBI deduction for these taxpayers.

Listen as our panel of experts explains property eligible for the UBIA calculation, including determining UBIA, determining UBIA for Section 1031 exchanges, step-ups, and involuntary conversions, and steps to maximize UBIA for qualifying taxpayers.

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Outline

  1. Criteria for identifying UBIA or qualified property
  2. Allocating UBIA to partners/shareholders
  3. UBIA treatment and allocation in nonrecognition transactions and other scenarios
    1. Section 1031 like-kind exchanges
    2. Involuntary conversions
    3. Transfers between affiliated group members
    4. Section 168(i)(7) step-in-the-shoes transactions
  4. Excess Sec. 743(b) basis adjustment
  5. Aggregation questions

Benefits

The panel will review these and other critical matters:

  • What assets qualify as UBIA property?
  • What is your UBIA when dealing with like-kind exchanges, involuntary conversions and other transactions?
  • How do you calculate the excess Section 743(b) basis adjustment?
  • What concrete steps can be taken to maximize UBIA for eligible taxpayers?
  • How is UBIA reported and allocated to partners and shareholders?
  • How does UBIA impact your QBI deduction?

Faculty

Palovick, Sara
Sara Palovick

Tax Manager
Withum Smith+Brown

Ms. Palovick specializates in real estate, and focuses most of her time in the areas of partnership and individual...  |  Read More

Taylor, Ian
Ian Taylor, CPA, MST

Senior Tax Manager
Withum Smith+Brown

Mr. Taylor focuses on the taxation of closely-held partnerships and S corporations in the manufacturing and real estate...  |  Read More

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