Tax Reform and Partnerships: What CPAs Need to Know in 2019

Description

The impact of the 2017 tax reform law on entities set up as partnerships for tax purposes is as acute as most observers predicted. The Act changed rates and loss allowances for most pass-through entities and created the highly complex Section 199A qualified business income (QBI) deduction. Tax advisers and compliance professionals continue to digest the planning implications and compliance challenges brought about by the new law.

The law altered the treatment of pass-through partnership income, specifically in the form of a 20% deduction for "qualified income" from a partnership, subject to wage limitations. Most professional service partnerships, such as attorneys and accountants, are not eligible to claim the deduction, which creates planning challenges and opportunities, particularly where these partnerships have lines of business income that would be eligible for the deduction.

In addition to the provisions specific to pass-through entities, the Act makes several changes that will impact many partnership businesses. The IRS issued proposed and temporary guidance for tax advisers on various components of the new law as applied to partnerships, but many open issues remain unresolved.

Listen as our experienced panel provides a recap of the partnership and LLC implications of the tax reform law and the resulting IRS guidance in its first year of operation.