Tax Treatment of Real Estate Dealers, Investors, and Professionals

Capital Gains vs. Ordinary Income Treatment, Opportunity Zones and 199A

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, January 28, 2020

Recorded event now available

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Course Materials

This course will cover the differences between real estate dealers, investors, and professionals, the tax consequences of each classification, and new classification considerations after recent tax reform. The panel will cover the current IRS challenges, the 199A deduction, and investing in opportunity zones for real estate ventures.

Description

Classification of taxpayers working in the real estate business continues to be one of the most hotly litigated areas of taxation. Taxpayers want dealer status when sales result in losses to benefit from ordinary deductions and investor status when sales result in gains to benefit from capital gains treatment.

Unfortunately, determining into which category a real estate sale falls is a facts and circumstances determination based primarily on case law. Property held primarily for sale in the ordinary course of business may lead to a dealer classification producing ordinary income, while the same piece of property, if held to benefit from its appreciation over time, could be considered an investment.

These considerations, along with new real estate quandaries presented by recent tax reform leave advisers to real estate investors, dealers, and professionals struggling. Taxpayers may now want to be a trade or business to benefit from the generous 20% deduction under 199A.

At the same time, taxpayers may not want to be in the active trade of developing real estate if they want to benefit from the tax savings provided by opportunity zones. Determining and reconciling the benefits and drawbacks of each real estate classification is critical for tax professionals advising taxpayers selling real estate.

Listen as our panel of experts details the criteria for determining each real estate classification, how to advise clients to obtain the most beneficial designation, and how to benefit from tax-savings opportunities as investors, dealers, and professionals working with real estate after tax reform.

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Outline

  1. Dealers
  2. Investors
  3. Professionals
  4. 199A and real estate classifications
  5. OZs and real estate classifications
  6. Challenges to classifications

Benefits

The panel will review these and other important issues:

  • The tax consequences of the classification of real estate sales
  • The primary factors the IRS considers when classifying real estate deals
  • Steps to take to obtain the desired classification
  • The current state of IRS challenges to dealer and investor status
  • When a real estate professional can benefit from 199A

Faculty

Capdevielle, Cliff
Cliff Capdevielle
Managing Attorney
Moskowitz

Mr. Capdevielle has been developing sophisticated tax planning strategies and resolving tax disputes for clients more...  |  Read More

Lovett, Brian
Brian T. Lovett, CPA, JD
Partner
Withum Smith+Brown

Mr. Lovett has extensive experience serving the tax needs of both public companies and closely-held businesses,...  |  Read More

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