Taginternal revenue service

IRS Finalizes Real Estate Safe Harbor for 20% QBI Deduction

By:  Amanda Wilson

Section 199A introduced a 20% deduction for qualified business income (previously discussed here).  To qualify for the deduction, income must be from a trade or business.  Whether rental activity rises to the level of a trade or business can often be a difficult question to answer.  In Revenue Procedure 2019-38 (found here), the IRS finalized the safe harbor previously proposed in Notice 2019-07.  This safe harbor provides a rental real estate enterprise will constitute trade or business for Section 199A purposes if the enterprise performs 250 or more hours of rental services during the year.  Any enterprise wishing to fall within this safe harbor must maintain records such as a time log or calendar documenting the services.  If the real estate is rented under a triple net lease, the safe harbor is not available.

The revenue procedure provides a helpful safe harbor, but it is important to note that it is only a safe harbor.  The fact that a real estate business cannot satisfy the safe harbor does not mean that it might not otherwise qualify as a trade or business for Section 199A purposes.

Reminder: Partnership and S Corporation Returns Due Tomorrow

By:  Amanda Wilson

As I previously discussed (here), the federal tax due date for partnership and corporate tax returns changed a few years ago.  Partnership and S corporation tax returns are due a month earlier on March 15th, while corporate tax returns are now due a month later on April 15th.  In other words, if you were thinking you have until April 15th to file your partnership or S corporation tax returns, you need to file for an extension tomorrow.

Considering Making A Qualified Opportunity Zone Investment?

By:  Amanda Wilson

 

Qualified Opportunity Zones are a hot topic in the tax and business world, and are an opportunity that span into almost any business market.  I get questions about them daily.  If you are considering making an investment in property in a qualified opportunity zone, or are simply wondering what an opportunity zone is, I recently presented on this topic.  A copy of the presentation materials can be found here.

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