Tagtax attorney

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.

Now Is The Time To Review Your Tax Provisions

By:  Amanda Wilson

As tax season is underway, one important deadline is coming that should not be overlooked.  Tax law allows for partnership and LLC agreements to be amended retroactively to the first day of the prior year, provided the amendment is executed before the due date (without extensions) for the prior year’s tax return.

What does this mean for your agreements?  You should look at the tax provisions and see if there are any items that should be corrected.  For example, do the allocation provisions result in unintended consequences that you would like to correct?   Would you like to add a limited deficit restoration obligation so that one member or partner can utilize losses?   Or does your agreement provide for a tax matters partner, which is a concept that was replaced by a partnership representative (previously discussed here).  You should act quickly, though, as the deadline for executing any amendments for the 2018 tax year is March 15, 2019.

IRS Announces New Real Estate Safe Harbor for 20% QBI Deduction

By:  Amanda Wilson

Section 199A introduced a new 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 Notice 2019-07 (found here), the IRS announces a safe harbor under which 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 IRS notice 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.

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