Real Estate Rules for Sole Proprietors After Tax Reform: IRC 199A, New Deduction and Depreciation Provisions

Changes to Cost Recovery, Business Interest Deductions, Excess Business Losses

This program is postponed. New date TBD.

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


Monday, December 31, 2018

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

(Alert: Event date has changed from 9/27/2018!)

or call 1-800-926-7926

This webinar will provide tax advisers and compliance professionals with a practical guide to the impact of the tax reform law on sole proprietorships holding rental real estate. The panel will outline how the Section 199A deduction applies to rental real estate held by individuals, as well as discuss changes to depreciation, loss limitation and carryforward rules, and deductibility of business interest.

Description

Tax reform passed in 2017 represents the most sweeping change to the U.S. income tax code in over 30 years and continues to present challenges to tax advisers, almost a year after its enactment. The impact on individual taxpayers receiving income from real estate sole proprietorships is particularly acute, with changes to depreciation, business interest treatment, net operating loss allowances, and deductions particularly relevant to real estate investors and professionals.

Central to the new law is the Section 199A deduction for qualified pass-through business income (QBI), which applies to all pass-through entities, including sole proprietorships. Tax reform also expands specific cost recovery provisions such as Section 179 and bonus depreciation under Section 168(k), and changes the useful life measurement for depreciating certain real property assets.

Not all of the new law’s provisions are favorable, however. Tax reform imposes a cap on “excess business losses” for taxpayers other than corporations and eliminates net operating loss carrybacks. Additionally, the law limits deductions for state and local taxes and establishes a limitation on deductions for business interest. Taxpayers with real estate holdings may elect out of the interest limitations, but the tax reform law requires that electing taxpayers use the alternative depreciation system.

Listen as our experienced panel provides a thorough and practical guide to the tax reform law’s impact on real estate sole proprietors.

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Outline

  1. Section 199A applied to sole proprietorships holding investment real estate
  2. Additional cost recovery provisions
    1. Changes in depreciable life for certain real property assets
    2. Bonus depreciation expanded with a five-year phaseout
    3. Section 179 expanded to include other assets
  3. Real estate elections to avoid business interest limitation
  4. Changes to net operating loss treatment
  5. New 1031 like-kind exchange rules

Benefits

The panel will discuss these and other important topics:

  • What elections are available for real estate investors and professionals to avoid the business interest deduction limitation?
  • Potential differences between treatment of real estate professionals and investors under the TCJA
  • What changes to depreciation and cost recovery expensing does the TCJA make?

Faculty

Bilsky, Jeffrey
Jeffrey N. Bilsky

Partner, National Tax Office
BDO USA

Mr. Bilsky has more than 20 years’ experience providing tax services to private equity investment funds, capital...  |  Read More

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