Completing Form 8995, Qualified Business Income Deduction Simplified Calculation
Please see below for additional instructions and information regarding this program.
The advent of the qualified business income deduction under Code section 199A has given rise to a myriad of difficult definitions, unanticipated complications, and a cacophony of confusion. The IRS has attempted to rectify the situation through the use of Form 8995, intended as an aid in determining the proper amount of the deduction. This course will walk you through Form 8995, explaining its intricacies and clarifying its ambiguities. The course covers the following topics:
•Who can take the qualified business income deduction
•Identifying qualified trades or businesses
•Determining the amount of qualified business income
•Recognizing which items included on Schedule K-1 are included in QBI
•Recognizing which items included on Schedule C are included in QBI
•Determining qualified REIT dividends and qualified PTP income/loss
- Basics of Code Section 199A 00:03:45
- Overall Limitation 00:06:20
- Trade or Business of Performing Services as an Employee 00:07:31
- What Constitutes Qualified Business Income? 00:09:29
- 13 Items Not Taken Into Account 00:11:43
- 13 Items Not Taken Into Account (cont’d) 00:14:18
- Schedule K-1 Items 00:20:28
- QBI Flow Chart 00:23:36
- QBI Flow Chart Instructions 00:23:55
- QBI Flow Chart Instructions (cont’d) 00:25:06
- QBI Flow Chart Instructions (cont’d) 00:26:15
- Safe Harbor for Rental Properties 00:27:38
- Rental Services 00:29:33
- Not Rental Services 00:30:32
- Not Applicable 00:32:28
- General Limitations 00:34:43
- Specified Service Businesses 00:40:00
- SSTB De Minimus Rules - 1 of 3 00:43:40
- SSTB De Minimus Rules - 2 of 3 00:44:32
- SSTB De Minimus Rules - 3 of 3 00:45:24
- Taxable Income Thresholds 00:47:05
- Special Situations: S Corps and Partnerships 00:50:41
- Special Situations: Cooperatives 00:52:42
- Special Situations: Estates and Trusts 00:54:19
- Special Situations: Electing Small Business Trusts 00:56:19
- Losses Among Multiple Businesses 00:57:34
- Losses Among Multiple Businesses (cont’d) 00:5:55
- Overall Loss 00:59:20
- Negative REIT and PTP 01:00:28
- Optional Aggregation 01:02:16
- Available Aggregation Rule 1: Common Ownership Requirement 01:04:43
- Available Aggregation Rule 2: Business Factors 01:0:58
- Form 8995 VS. Form 8995-A 01:09:15
- Form 8995-A Schedules 01:10:32
- Form 8995-A Schedule A Part 1 01:11:59
- Form 8995-A Schedule A Part 2 01:17:48
- Form 8995-A Schedule B 01:18:39
- Form 8995-A Schedule B - Question 1 01:20:01
- Form 8995-A Schedule B - Question 2 01:20:48
- Form 8995-A Schedule B - Question 3 01:21:28
- Form 8995-A Schedule C 01:22:19
- Form 8995-A Schedule D 01:23:02
- Form 8995-A Example 01:26:20
- Completing Form 8995-A Part 1 01:26:43
- Completing Form 8995-A Part 2 01:26:57
- Completing Form 8995-A Part 3 01:30:29
- Completing Form 8995-A Part 4 01:31:41
- Completing Form 8995-A 01:32:37
- Form 8995 Example 01:34:19
- Completing Form 8995 01:34:41
- Completing Form 8995 (cont’d) 01:35:11
- Completing Form 8995 (cont’d) 01:35:59
- Presentation Closing 01:40:02
- 199A 00:03:45, 00:53:09
- Cooperatives 00:52:44
- De Minimus Safe Harbor 00:43:42
- DNI - Distributable Net Income 00:55:21
- Form 1099-PATR 00:53:59
- Form 8995 00:01:12, 00:23:49, 00:56:54, 01:09:22, 01:34:25
- Form 8995-A 00:01:12, 01:09:23, 01:30:33
- Form W-2 00:34:56
- PTP - Publicly Traded Partnership 01:00:29
- Qualified Business Income (QBI) 00:14:56, 00:54:48
- REIT - Real Estate Investment Trust 01:02:28
- Safe Harbor 00:28:08, 00:32:48
- Schedule K-1 00:20:30
- S Corporation 00:22:33, 00:50:49
- SSTB - Specified Service Trade or Business 00:26:54, 00:43:40
199A: 199A allows taxpayers to deduction up to 20% of qualified business income (QBI) from a domestic business operated as a sole proprietorship or through a partnership, S corporation, trust, or estate. The Sec. 199A deduction can be taken by individuals and by some estates and trusts
Cooperatives: A farm, business, or other organization that is owned and run jointly by its members, who share the profits or benefits.
De Minimus Safe Harbor: The de minimis safe harbor is simply an administrative convenience that generally allows you to elect to deduct small-dollar expenditures for the acquisition or production of property that otherwise must be capitalized under the general rules
DNI - Distributable Net Income: Distributable net income is income allocated to the beneficiaries of a trust. This figure is the maximum taxable amount received by a unitholder or beneficiary—anything above that figure is tax-free.
Form 1099-PATR: File Form 1099-PATR, Taxable Distributions Received From Cooperatives, for each person to whom the cooperative has paid at least $10 in patronage dividends and other distributions described in section 6044(b), or from whom you withheld any federal income tax under the backup withholding rules regardless of the amount of the payment.
Form 8995: Use Form 8995 to figure your qualified business income (QBI) deduction. Individual taxpayers and some trusts and estates may be entitled to a deduction of up to 20% of their net QBI from a trade or business, including income from a pass-through entity, but not from a C corporation, plus 20% of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. However, your total QBI deduction is limited to 20% of your taxable income, calculated before the QBI deduction, minus net capital gain.
Form 8995-A : Form 8995 is required for taxpayers who (1) have qualified business income, qualified REIT dividends, or qualified PTP income; (2) have taxable income that does not exceed the threshold amount, and (3) are not patrons of specified agricultural cooperatives. All other taxpayers with QBI must use form 8995-A.
Form W-2: Form W-2 is an Internal Revenue Service tax form used in the United States to report wages paid to employees and the taxes withheld from them. Employers must complete a Form W-2 for each employee to whom they pay a salary, wage, or other compensation as part of the employment relationship. - Wikipedia (https://en.wikipedia.org/)
PTP - Publicly Traded Partnership: A publicly traded partnership (PTP) is a business organization owned by two or more co-owners whose shares are regularly traded on an established securities market. A publicly traded partnership is a type of limited partnership managed by two or more general partners that can be individuals, corporations or other partnerships, and that is capitalized by limited partners who provide capital but have no management role in the partnership.
Qualified Business Income (QBI) : QBI is the net amount of qualified items of income, gain, deduction and loss from any qualified trade or business, including income from partnerships, S corporations, sole proprietorships, and certain trusts.
REIT - Real Estate Investment Trust: A real estate investment trust (REIT) is a company that owns, operates, or finances income-generating real estate. Modeled after mutual funds, REITs pool the capital of numerous investors. This makes it possible for individual investors to earn dividends from real estate investments without having to buy, manage, or finance any properties themselves.
Safe Harbor: A safe harbor is a provision of a statute or a regulation that specifies that certain conduct will be deemed not to violate a given rule. It is usually found in connection with a vaguer, overall standard. Under the safe harbor, a “rental real estate enterprise” is treated as a trade or business for purposes of Sec. 199A if at least 250 hours of services are performed each tax year with respect to the enterprise. ... The safe harbor requires that separate books and records be maintained for the rental real estate enterprise.
Schedule K-1: The Schedule K-1 is an Internal Revenue Service (IRS) tax form issued annually for an investment in partnership interests. The purpose of the Schedule K-1 is to report each partner's share of the partnership's earnings, losses, deductions, and credits.
S Corporation: An S corporation, for United States federal income tax, is a closely held corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. In general, S corporations do not pay any income taxes.
SSTB - Specified Service Trade or Business: An SSTB is a trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, investing and investment management, trading, dealing in certain assets or any trade or business where the principal asset is the reputation or skill of one or more of its employees or owners.
Chuck Borek is a practicing attorney and founder of the Borek Group, LLC. Chuck is also a CPA, and his background includes five years as a partner in a public accounting firm. He received his law degree and MBA summa cum laude from the University of Baltimore in 1993, where he was editor-in-chief of the Law Review. He has been teaching professionally since 1989, including four years as an Associate Professor of Accounting and two years as a Visiting Assistant Professor of Law. He ha... View Full Profile
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