Partnership Activity Aggregation Rules: Unpacking the "Specified Service Trade or Business" Definition
W2 Wage and Income Tests, Avoiding "Pack and Crack" Disallowances, and Claiming the 20% QBI Deduction
Recording of a 110-minute CPE webinar with Q&A
This course will provide tax advisers to pass-through entities with an in-depth and practical guide to the rules governing permissible activity aggregation among multiple pass-through entities (PTEs) for purposes of calculating the 20% deduction for Qualified Business Income. The panel will go beyond the basics to detail the Service's position on specified service trades or businesses (SSTBs) excluded from qualified business income (QBI) treatment, describe the differences between aggregation rules under 199A and the grouping rules under Section 469, and discuss aggregation strategies to maximize the deduction.
Outline
- Section 199A deduction defined
- Clarifications on SSTBs
- Cross-references to Section 1202 capital gains exclusion rules
- Differences between SSTB definitions and other IRS provisions regarding service businesses
- Principal asset test
- De minimis tests and threshold amounts
- Anti-abuse provisions
- Aggregation rules
- Benefits of aggregating trades and businesses
- Computation and treatment of deductions
- W2 wage calculation rules
- Notice 2018-64 permissible methods
- Definition of W2 wages for QBI calculations and limits
- Allocating W2 wages to PTE owners
- Impact of reasonable compensation requirements on QBI deduction calculations
- Real estate safe harbor
Benefits
The panel will discuss these and other essential questions:
- How the proposed regs' definitions of SSTBs differ from other provisions in the Code regarding service-related businesses
- The IRS position expressed in the proposed regulations on the application of the "principal asset" test in determining whether a business line is an SSTB ineligible to claim the 20% pass-through deduction
- The details of what to include in the W2 wage and income test for purposes of QBI eligibility
- Benefits to taxpayers of aggregating multiple trades and businesses
Faculty
Robert S. Barnett, JD, MS (Taxation), CPA
Partner
Capell Barnett Matalon & Schoenfeld
Mr. Barnett’s practice is highly concentrated in the areas of taxation, trusts, estates, corporate and... | Read More
Mr. Barnett’s practice is highly concentrated in the areas of taxation, trusts, estates, corporate and partnership law and charitable planning. His experience includes surrogate’s court practice, tax dispute resolution in both federal and state jurisdictions, and tax court representation. Mr. Barnett frequently assists clients in structuring financial transactions and charitable gifts. His articles and lectures encompass a wide variety of topics, including business succession, estate planning, generation-skipping, stock options, effective strategies for removing tax liens, proper utilization of the marital deduction and utilization of partnership elections.
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Joseph C. Mandarino
Partner
Smith Gambrell & Russell
Mandarino is a Partner in the Tax Practice of Smith, Gambrell & Russell, LLP. His practice focuses on... | Read More
Mandarino is a Partner in the Tax Practice of Smith, Gambrell & Russell, LLP. His practice focuses on corporate, tax and finance law. Mr. Mandarino is involved with a wide variety of businesses and transactions, including experience with compliance, planning and M&A activities for partnerships, individuals and corporations. Mr. Mandarino writes and speaks extensively on a wide range of business, tax and finance topics.
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