Check System
Send us your comment!

Your comment will be read by our web staff, but will not be published.

Please do not enter any personal information. Your comment is voluntary and will remain anonymous, therefore we do not collect any information which would enable us to respond to any inquiries.

However, provides a How to Contact the IRS page where you will find guidance on where to submit specific questions.

Share this presentation
Copy and paste the following URL to share this presentation
To email a link to this presentation, click the following:
This program writes a small 'cookie' locally on your computer when you set a bookmark.
If you want to utilize this feature, check the following checkbox. Otherwise, bookmarks will be disabled.
This is an IRS
audio presentation.

To view this page, ensure that Adobe Flash Player
version 10 or greater is installed.

Get Adobe Flash player

Slides PDF

PHILIP YAMALIS: Welcome to our IRS presentation today. Tax Reform Basics for Small Businesses and Pass-Through Entities. We're glad you're joining us. My name is Phillip Yamalis.

I'm a Stakeholder Liaison at the Internal Revenue Service and it's my pleasure to be your moderator for today's webinar. Today's webinar will last approximately 60 minutes. Before we begin the presentation, I'd like to ask that if you're with the media, please send us an email message at the address provided on this slide. That address is In your email, please include your contact information, and, of course, the news publication you're with. And then our media relations folks or Stakeholder Liaison staff can assist you or answer any questions that you might have.

Now in case you experience a technology issue, this slide again shows some helpful tips and reminders. We've posted a technical help document that you can download from the materials button on the left side of your screen. It provides the minimum system requirements for viewing this broadcast and along with some best practices and quick solutions. Now if you're having technical issues, you can contact our Help Desk for assistance today. We have two numbers on standby that you can call. The first number is 1-888-858-3240. That's a toll-free number. The second number is 954-935-7767. This number is not toll-free. These numbers of course are on the slide in front of you. If you've completed and passed your system check and you're still having problems today, then as I mentioned earlier you can try one of the following options. One option is to close the screen where you're viewing the webinar, relaunch it. The second option is to click the gear icon on your viewing screen that you can find on the top right-hand corner of the slide and photo boxes. You will be given two choices. So please select Flash instead of HLS from the available media box. Now if you don't have the gear icon that we're talking about, and you've tried relaunching your viewing screen and that doesn't fix your problem, try using a different browser to launch and view the webinar, okay? You might also want to make sure you close all the extra windows and applications that is you have opened on your viewing device to give yourself some random access memory they call it. You might have received today's materials in a reminder email. If not, once again, you can download the PowerPoint in the PDF format. As well as the technical help document that might assist you if you experience technology issues. To download these documents, simply click on the materials button on the left side of your screen. As I've mentioned earlier, closed-captioning is available for today's presentation. If you're having trouble hearing the audio through your computer speakers, please click the CC button on the left side of your screen. This feature will be available throughout today's broadcast. Now, if you have a topic specific question for us today, please submit them by clicking on the "Ask question" button that is also on the left side of your screen. And enter your question in the Text Box and don't forget to click Submit of course. Please, I cannot emphasize this enough today please, please, please do not enter any sensitive or taxpayers specific information when you ask your question. We ask that you wait for your specific topic to be addressed today before submitting your questions. We appreciate your questions, so, really, don't by shy. Send us your questions. Remember, click the Submit button so that we can see your questions. Now, during today's broadcast, we'll take a few breaks to share some knowledge-based questions with you. At those times, a polling style feature will pop-up on your screen with a question and some multiple-choice answers. We ask that you select the response that you believe is correct by clicking the radio button next to your selection, and then click Submit. Please note, you might need to turn off your pop-up blocker to receive these questions. If you do not get the pop-up box for responding, simply enter your response timely in the Ask Question feature this way we can track your participation in today's webinar. Okay. Let me introduce our presenters for today's webinar. Our first presenter is John Tuzynski. He's a Director of Examination in the headquarters of the small business self-employed division of the Internal Revenue Service. The other presenter today is Mr. Richard Furlong of he's a senior Stakeholder Liaison, proud to call him my colleague in the communication and liaison division. So, guys, there's no time like the present to get things started. John, let me turn it over to you. JOHN TUZYNSKI: Thank you, Phillip. And it's my pleasure to be with you here today. During this session, we will highlight provisions in the Tax Cuts and Jobs Act that was signed into law on December 22nd of 2017 that affects small businesses. There were a significant number of provisions, and we do not have time today to cover them all, but we have picked some that we believe will be relevant to you. So we will review the following topics. New rules for depreciation. Modifications of the treatment of certain farm property. A collection topic, the time limit for contesting levies. Information on like-kind exchanges. The Qualified Business Income Deduction, better known as The 199A deduction. And the gift and estate tax exclusion. So with that, let's start with new rules for depreciation that can be found on the next slide. So we will be talking about section 179 property placed in service in taxable years beginning after December 31, 2017. The maximum section 179 deduction increased from $500,000 to $1 million. And I remember when I started with the IRS back in 1985, the 179 deduction was $10,000. So you can see just how much it is now. I very valuable deduction for small businesses. The election is made to claim the 179 deduction on form 4562. And just like to add that this deduction cannot add to or create a loss. Also, the deductions phase out threshold has increased from $2 million to $2.5 million. And some refer to that as the investment limitation. So the maximum 179 deduction is reduced dollar for dollar by the cost of qualified property that exceeds this limit or $2.5 million. In addition the definition of section 179 property now includes, if the taxpayer elects, qualified improvement property. And what that means is any improvement that is to section 1250 property to an interior portion of a building that is non-residential real property if the improvement is placed in service by the taxpayer after the date that the building was first placed in service. Improvements do not qualify if they are attributable to the enlargement of the building, you know, any elevator or escalator or the internal structural framework of the building. And in addition, the following improvements also are subject to 179 and that would be non-residential real property, again, placed in service after the property was first placed in service. So that means you can't just take it on newly acquired property. But it applies to roofs, HVAC equipment, fire protection systems, alarm systems, and security systems. The new law also expands the definition of section 179 property to in include certain depreciable tangible personal property when used when furnishing lodging. And what I mean by that would be beds, furniture in hotels, and apartment buildings. For qualified property acquired and placed in service after September 27, 2017, and, so, this is actually a retroactive provision. The bonus depreciation increased from 50% to 100%. The slide shows you the change in the percentage after 2022. Also, qualified film, television, or live theatrical productions are now eligible for bonus depreciation rather than its prior treatment as being able to be immediately expensed under section 181. So now a taxpayer can use the new bonus depreciation if a deduction otherwise would have been allowable under section 181. So on the next slide, I'd like to talk about what I think is really one of the biggest changes to the bonus depreciation and that is in addition to new property, the new rules allow the additional first year depreciation now on used property. And a couple of caveats to that. So you can't have used the property at any time before acquiring it. And you can't acquire the property from a related party. So I think as you'll see on the next slide, it can be used property, but new to you. Okay? So what that means is you can't have a acquired property from a component member of a controlled group of corporations. Your basis can't be determined based on what that basis would have been on the hands of the seller or the transferor, and your basis is not figured under the provision for deciding the basis of the property acquired from a decedent. For property place in service after 12/31/2017, I'm going to talk a little bit about luxury automobiles. So if you don't take the additional first year bonus depreciation, the maximum allowable depreciation deduction for the first year is $10,000. $16,000 for the second year. And then $9,000 for the third year. And then after that, $5,760. But if you elect the first year bonus depreciation, the allowable depreciation deduction for the first year is increased by $8,000. It's now $18,000. In addition, as you can see in the second bullet, the new law shortens the recovery period for machinery and equipment used in a farming business. It was seven years, and now it's five. And it excludes grain bins, and cotton ginning assets, fence and other land improvements. In addition, the original use of the property must begin with the taxpayer after 12/31/2017 and that's as well as the recovery period. And as you can see on the last bullet, the new law removes computers or peripheral equipment from the definition of listed property. And that's provision 13202 of the tax cuts and jobs act.

And, so, speaking of certain farm property, a taxpayer is not required to use the 150% declining balance method for 3, 5, 7, and 10-year farm property placed in service after 12/31/2017. However, if the property is 15 or 20-year property, the taxpayer would still continue to use the 150% declining balance method. So Philip, I think it's time for us to share our first polling question with the audience. PHILIP YAMALIS: John, sounds like a plan. Excellent stuff on the new rules for depreciation. So let's take a look at our first polling question then. Which statement on the slide is true regarding the new rules for depreciation? Which statement is true regarding the new rules for depreciation? Here are your choices. Is the correct response A, bonus depreciation increased from 50% to 100%? B, the maximum section 179 deduction is increased from $500,000 to $1 million. C, computers are no longer considered listed property. Section 179, D, Section 179 deduction phase out threshold has increased to $2.5 million. Or is it E, all of the above?

Take a minute. Click on the radio button you believe most closely answers this question.

Which statement is true regarding the new rules for depreciation? A, bonus depreciation increased from 50% to 100! . B, maximum Section 179 deduction increased from $500,000 to $1 million. C, computers are no longer considered listed property.

D, Section 179 deduction phase out threshold increased to $2.5 million. Or is it E, all of the above. Okay. I think I've given you a moment to think about this and answer this correctly. Let's stop the polling now, folks. And let's share the correct answer on the next slide. All right. Which statement is true regarding the new rules for depreciation. The correct response is E. All of the above. All right. Folks, let's see how you did.

I'm waiting for our technical support to flash to me what percentage of you responded correctly.

And okay. It looks like 92% of you answered that correctly. Fantastic! Fantastic! So, that means everybody is paying attention. So Richard, let me turn it over to you to discuss the time limits for contesting levies. RICHARD FURLONG: Well thank you, Philip and good afternoon, everyone. Now as John indicated when he reviewed the topics that he and I will discuss today, this topic on levies was incorporated into TCJA and it deals with collection matters. So first, just a bit of a refresher on what is a levy. Now, the taxpayer fails to pay an assessed tax after notice and demand for payment. Then the IRS may seek collection of the taxes, and that would include interest and penaltiesIndiscernible] and by levy, against all of the taxpayer's property and that would include real property, personal property, tangible property, and even intangible property. Under the new law however, as we'll discuss in this slide and the subsequent slide, the taxpayer or a third-party custodian of property that the Service has wrongfully levied has an additional amount of time to administratively contest that levy. So, this is provision under the internal revenue code we're talking about code section 6343 B] And 6532 C] And those are the two sections that is deal with the time period for filing an administrative claim of wrongful levy or for the return of property of proceeds from the sale of property that has been wrongfully levied. And a levy is considered wrongful if the Internal Revenue Service improperly attaches a levy to a property that belongs to a third-party. Let's say financial institution or physical custodian owner of the property in which the taxpayer has no rights. The taxpayer whom we're seeks to collecting the delinquent taxes. So this is a taxpayer-favorable provision that extends that time. Previous it was only 9 months for filing these claims. Now it's extended until 2 years from the wrongful levy. And one more point on this slide, the tangible property, there is no time limit to file a claim if the IRS has wrongfully levied the property of a house or an automobile. Now, if we go into the next slide, there's different ways that the service can return the property. The IRS can return the property that was levied and obtained by the service. It can return any money that was levied upon, let's say a financial account. Or the service can return any money received from the sale of the property that was wrongfully levied. Now, keep in mind though that before the IRS levies any properties, we're obligated under the law, and this law has been in effect for quite a while, to issue what is referred to as a Final Notice of Intent to Levy your notice to levy and notice of your rights to a hearing. Before issuing a notice of a levy to third-party in custody of the taxpayer's property. And it's very important that anyone who receives the final notice of intent to levy should call the IRS to resolve the liability before a levy is issued. And I would like to point out that among the resources on the IRS tax reform webpage, we have a one-page publication. It's number 4528. It's entitled Making an Administrative Wrongful Levy Claim Under Internal Revenue Code Section 6343B. I recommend that to you if you're ever pursuing a wrongful levy claim within the allowable two years. And with that, Philip, I think we're ready for our next polling question. PHILIP YAMALIS: You got it. I'm taking notes here. You said publication 4528? RICHARD FURLONG: That is correct.

PHILLIP YAMALIS: Thank you so much. All right. Our next polling question is true or false question. The question is: The time limit for contesting levies is extended from 9 months to 2.5 years. So do you believe this is true or false? Of course you select A for true, and B for false. Take a minute. Click on the radio button you believe most closely answers the question.

Time limit for contesting levies is extended from 9 months to 2.5 years. Again is the correct response A, true? Or B, false? Okay. All right. Hopefully you've had time to figure out whether that's true or false. Let's stop the polling now. And we'll share the correct answer on the next slide. And the correct answer for the time limit for contesting levies is extended from 9 months to 2.5 years. The answer is B, false. Time limit was increased to 2 years. Not 2.5 years. So let's see how you did. I see that 73% of you answered that had correctly. It might have been a little bit of a trick question. What do you think Rich? Want to give a little more clarification on that? RICHARD FURLONG: Sure, and I think perhaps because the area of collections is not necessarily an area that the majority of our audience are involved in. So, the reason that this is a taxpayer-favorable provision of the Tax Cuts and Jobs Act is that there's additional time for a third-party who had for a property wrongfully levied by the IRS, because let's say the party had a security interest that was ahead of the Service, they have now not 9 months, but 2 years to file an administrative claim or to go to court. So it's not two and a half years but it's two years. And, again, that publication 4528 provides a nice overview of the process to follow when filing these wrongful levy claims, Phil.

PHILIP YAMALIS: Awesome, man. Thanks for that clarification. That's awesome. Yeah, I have to agree with your statement that not a lot of us are familiar with the collection procedures. So this could be a very, very beneficial area that we touched on today. So why don't we continue. I'm going to turn it back to you to discuss like-kind exchanges.

RICHARD FURLONG: Okay. Thank you, Phillip. And this is probably an area which a greater number of our audiences are familiar. And certainly, if there's a code section that if you're involved in real estate, code Section 1031 is one your familiar with. Because that provides the ability under certain circumstances to effectuate the like-kind exchange. And when doing so properly, any gain or loss is deferred on the exchange of like-kind property. However, the new law makes a major change to Section 1031 for like-kind exchanges. And beginning on or after January 1, 2018, for any exchange property that the taxpayer is seeking Section 1031 treatment either defer the gain or loss, the exchange property must be real property. And it must be real property held for productive use for a trade or business or for an investment. So that means that in this context, the real property that is held primarily for sale to customers, i.e., inventory would not qualify for like-kind exchange treatment. And that was the case under old law. Now the big change though is that by now under the new law, allowing only real property to qualify for like-kind exchanges, exchanges of personal property will no longer qualify. Now personal property would be defined as vehicles, machinery, equipment, and also intangible items such as patents or other types of intellectual properties. Those no longer qualify for like-kind exchange treatment for exchanges on or after January 1, 2018. With one caveat, there is a one transition rule under the new law. So if there are exchanges of personal or intangible property, in which the taxpayer disposed of the relinquished property, that's the property that the taxpayer is giving up and exchanging, or received the replacement property, in either situation if they relinquish the property or receive the replacement tangible or intangible personal property on or before December 31, 2017, then it will still qualify for like-kind exchange treatment. Now on our next slide, let's just look at the basic requirements and one always wants to keep in mind for like-kind exchanges. Obviously, in order to be considered like-kind, the real properties must be of the same nature or character so, generally speaking, real property is generally of a like-kind to other real property irrespective of how that property is used. The one exception to that is that real property located outside of the United States is not considered like-kind to real property located within the U.S.. So you could not have a Section 1031 property for exchanging U.S. real estate, real property, for real property outside of the United States. Also, under the 1031, exchange of stock in what I refer to as mutual ditch, reservoir, or irrigation companies, they may still qualify for like-kind exchange under the new law. And that's no change from prior law. Similarly, the requirement that the taxpayer must identify the replacement property within 45 days the of disposition of the relinquished property and that the entire exchange must be completed within 180 days. Those are still requirements in code Section 1031. And, finally, any non-qualifying property that is part of a like-kind exchange, it's treated as what we refer to as "Boot." And the taxpayer will need to recognize at least a portion of the otherwise deferred gain if there is boot involved in that exchange. Typical example would be cash in the exchange. So, as under the prior law, however, if you do receive boot, it would not trigger the recognition of any loss in the exchange. So Phil, that's a lot of information. And I think it tees us up for next polling question. PHILIP YAMALIS: It sure does, Richard. So, let's ask the audience, are you ready for our third polling question? Well, here it is. Which of the following statements is true regarding like-kind exchanges under the new tax law? Is the answer A, properties do not have to be the same nature or character to be considered like-kind? B, taxpayers do not have to apply Section 1031 for qualifying exchanges of real property? Or is it C, exchanges of personal property no longer qualify for like-kind exchange treatment? Take a minute. Click on the radio button that you believe most closely answers the question. Which of the following statements is true regarding like-kind exchanges under the new law? Possible responses are A, properties do not have to be the same nature or character to be considered like-kind. B, taxpayers do not have to apply Section 1031 for qualifying exchanges of real property. C, exchanges of personal property no longer qualify for like-kind exchange treatment.

Take a look. Okay. Let's stop the polling now. We'll share the correct answer on the next slide. And the correct answer is C. Exchanges of personal property no longer qualify for like-kind exchange treatment. All right. So let's see how you did. Excellent! I see that 90% of you responded correctly. That's an A in my book. So, John, let's turn it back over to you, because it looks like you're going to share some information about Qualified Business Income with us? JOHN TUZYNSKI: Yes. Thank you, Philip. So, this provision is sometimes referred to as the 20% deduction or the 199A deduction. This deduction will affect many taxpayers. For taxable years beginning after 12/31/2017, individuals and certain trusts and estates may be entitled to do a deduction of up to 20% of their qualified business income from a qualified trade or business plus 20% of the aggregate amount of their qualified REIT dividends and qualified publicly-traded partnership income. Now, Qualified Business Income, or QBI, means the net amount of qualified income, gain deduction, and loss, for any qualified trade or business of the taxpayer. So it could be, you know, QBI from a partnership, from an S-Corporation, from a Schedule C. Sole proprietor. The deduction is subject to multiple limits, and we're going to talk a little bit about that. For example, the type of trade or business, the taxpayer's taxable income, the amount of W-2 wages is paid with respect to the qualified trade or business. And unadjusted basis of qualified property held by the trade or business. Now, this is very important. Taxpayers can take this deduction in addition to the standard deduction or itemized deduction. And the deduction will be reported on line 9 of the new 1040. So, in general, a qualified trade or business is any trade or business other than a specified service trade or business, which we're going to define in a minute. Or the trade or business of performing services as an employee. So what that means is you can't take this deduction off of or related to, your wages that would be reported to you on a W-2.

So, let's talk about just what a specified service trade or business is. So, a specified service trade or business is any trade or business described in internal revenue code section 1202. And some of you may remember section 1202 deals with personal service corporations with two modifications. And that is 199A removes engineering and architecture. So, what is it? A specified service trade or business includes trade or businesses that provide services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, or any other trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees or owners. And just to talk a little bit about that last part, we did issue proposed regulations with regard to 199A on August 8th and on page 166 for those of you that are interested, we actually, and that is the Treasury Department and IRS narrowly defined reputation or skill. And, so, specified service with respect to reputation or skill only applies when it comes to a person receiving fees or compensation for endorsing products or services, individuals that get paid for their likeness, their name, their signature, their trademark, or appearing at an event such as radio, television, or other media formatted show. So, in addition, a specified service trade or business on the next slide is also any trade or business which involves a performance of services that have to do with investing, investment management, trading, or dealing in securities. But one of the key things you'll see on the next slide is, and this is probably the most important slide in the presentation. And it has to do with the thresholds. Okay? And, so, there is a lower threshold, and then there's sort of a phase in, phase out threshold, and then there's an upper threshold that's based on taxable income. So the specified service exclusion does not apply to taxpayers who's taxable income is less than $157,500 or $315,000 married filing jointly. So what that means is, regardless of if it's law, health, accounting, regardless of the individual's trade or business or occupation, right? They're going to get the deduction. Right? They're going to get the 20%, but there's another limit that we're going to talk about on another slide. And then the deduction is reduced for taxpayers that are in a specified service trade or business if they're between $157,500, and $207,500, and $315,000 and $415,000 married filing jointly. And income from a specified service trade or business is not income from a qualified trade or business with taxable income above $207,500 or $415,000 married filing joint. So what that means is that there is no 199 cap A deduction for individuals that are in those fields of law and health, and consulting, et cetera if you're above those taxable income thresholds. So on the next slide, and we believe this slide really applies to the vast majority of Americans. The deduction for taxpayers with taxable income below the lower threshold amounts of $157,500, or $315,000 married filing jointly, regardless, and I stress that, regardless, and I stress that, regardless of the qualified type of trade or business is the lesser of 20% of qualified trade or business income plus 20% of qualified REIT dividends and qualified publicly traded partnership income or 20% of the excess of taxable income over net capital gains. So on the next slide, there are other limitations for those folks that have taxable income between $157,500 and $207,500. And the $315,000, and $415,000, married filing jointly. So the deduction is Eye reduced based on wage and basis limitations. So it does get more complicated here. For these taxpayers, the amount determined for qualified business income is limited to the greater of 50% of wages from the qualified trade or business or 25% of wages plus 2.5% of the unadjusted basis of qualified property from a qualified trade or business. So, just couple of other special rules to be aware of.

There are rules for cooperatives. You know, we're working on additional guidance here at the IRS and Treasury with regard to agricultural and horticultural cooperatives because they're going to be allowed for a deduction for domestic production activities. So I had mentioned before that the IRS issued proposed regulations on August 8th. We also issued FAQs on that date. As well as a news release. And so those informations are available if you need to learn more about the 199A deduction. And we do anticipate issuing more help for taxpayers in the form of guidance before December 31st. So Philip, I know that was quite a bit of information. But how about we go ahead and do one final polling question today? PHILIP YAMALIS: Okay, John. I agree. That is a lot of information. But awesome information, and I agree that this is the perfect time for our final polling question. Let's do it. Our fourth and final polling question is: Which of the following statements is true regarding Qualified Business Income?

Here are your choices. Is the correct response A, 199A applies to qualified publicly traded partnership income? Let me repeat that. A, 199A applies to qualified publically traded partnership income? B, Qualified Business Income is the net amount of qualified income, again, deduction and loss for any qualified trade or business? C, the specified service exclusion does apply to taxpayers who's income is less than $157,500 or a $315,000 for married filing jointly.

And D. A and B. Or E, A, B, and C. Take a minute, to click on the radio button you believe most closely answers the question. Which of the following statements is true regarding Qualified Business Income. Again, do you think the correct response is A, 199A applies to qualified publically traded partnership income? B, Qualified Business Income is the net amount of qualified income, gain, deduction, and loss for any qualified trade or business? C, the specified service exclusion does apply to taxpayers whose income is less than $157,500, or $315,000 if they're married filing jointly. D, A and B. Or E, A, B, and C. Okay, hopefully, you've completed it and filled in the button for the correct answer. Let's stop the polling now. We'll share the correct answer on the next slide. And the correct answer is D. Both A and B. And this is because of the specified service exclusion does not apply to taxpayers whose income is less than $157,500, or $315,000 for married filing joint which then would make C a false statement. Okay. So let's see how you did. Okay. 32%. Yes. 32% of you responded correctly. So that could tell us that we're either having technical issues or let me do it this way. John, just give me a quick clarification on why the answer here would be A and B. JOHN TUZYNSKI: Yeah, no thanks Philip. Thanks. I think, you know, C is obviously is the issue here. So this statute was designed so that below that lower threshold, those numbers $157,500 and $315,000, it doesn't matter if the trade or business of the taxpayer.

Okay? So we talked about those specified services. So regardless any taxpayer below those levels would be entitled to take the 199A deduction. So it could be the way this is worded where it says the specified service exclusion does apply to taxpayers below that. And maybe it's just the way it was phrased, but I mean I think the takeaway from this, Philip, would be that below that lower threshold taxable income level, individuals will be entitled to the 199A deduction subject to the lesser of the 20% of their QBI compared to the 20% of their taxable income less net capital gain. So, again, for those that got that wrong and need more information, there is additional information available on PHILIP YAMALIS: Okay and that's very well stated. Of course we will have time for question and answers at the end of our broadcast as well. So with that, Richard, let me turn it over to you to take us home. RICHARD FURLONG: Well,thank you, Philip. Now the next topic, code section 274 and how it was impacted by the Tax Cuts and Jobs Act. This was not one the topics we had originally planned to discuss. But John and I and our webinar team thought it was important to address this topic, particularly in light of some significant with transitional guidance that has been released in the past four weeks. So under the new law, the deduction for business meals and entertainment has been impacted for amounts incurred or paid after December 31, 2017.

In other words, the amounts paid for, specifically for entertainment beginning in 2018.

Because as you can see on this slide, no longer under revised code section 274 can a trade or business deduct what are considered to be entertainment, amusement, and recreation business expenses. Those are no longer deductible. And that is a significant change. Now, on our next slide, just to remind you about the deductibility of business meals, because business meals still may be deducted, and by meals, again we mean food and beverages. But only 50% of the cost of those business meals if they meet these 3 requirements. Either the taxpayer or an employee of the taxpayer is present at the furnishing of the meals. And the meals are provided to either a current or potential client, a customer, or a business contact. And, of course, timely, the food and beverages are not considered lavish or extravagant. They're ordinary and necessary expenses that are not lavish or extravagant. And if they meet those conditions they're deductible, at 50% of the cost incurred. So what has changed and I think this next slide is very important and this is the reason why we added it. Specifically, that transitional guidance that you see there. Notice in 2018-76. It was announced on October 3rd of 2018 And it says, that in that guidance, and it's referred to as transitional, because within the 9 pages of the notice, the Service is indicating that we intend to issue I understand casing we wish you proposed regulation subsequently. But for the time being, taxpayers can rely on the guidance in the notice and determine what is considered deductible meals and what is considered non-deductible entertainment expenses. So entertainment expenses will not be considered non-deductible entertainment if those entertainment expenses are purchased separately from the event or stated separately from the cost of the event on one or more bills, invoices, or receipts. So just quickly let me give you an example. quickly. Let's say a business takes out a customer, client, potential customer to a ballgame. And at the ballgame, they pay for the tickets. That is entertainment and that is no longer deductible beginning in 2018.

However, if at the ballgame, the business owner buys hot dogs and Coke, and other refreshments for the customer, because they're purchasing them separately, those are deductible meals subject to the 50% limitation. And there are several examples in the notice. I recommend it to you because I do think this transitional guidance goes a great way clarifying some ambiguities that were out there prior to the guidance. And then the final topic I want to touch on briefly is a change to the gift and estate tax exclusion amount. Now under the new law, the basic exclusion amount under code section 2010 (C)(3) that is applicable at the time of the decedent's death has been essentially doubled. The basic exclusion amount It goes from $5 million per taxpayer and that is amount is indexed for inflation and has been. And now it's doubled to $10 million indexed for inflation. So for 2018, And now the basic exclusion amount adjusted for inflation amount is $11,180,000. And that translates into and estate tax credit of just about $4.4 million. Now this is a temporary provision. So this doubling of the basic exclusion amount expires as of December 31, 2025. And then finally I have several slides here on the enormous amount of resource that is we have on the tax reform page at And you can see the web address there. We highly encourage you to bookmark it as Philip said in the opening remark. It's been redesigned this summer. It's very easy to navigate through the website, depending upon your interest and the area of tax reform that you're interested in, whether you're an individual, a business, or perhaps a tax-exempt entity. And on our next slide, we see some of the resources. Many of these bullets you see on this slide can be referenced on the landing page for tax reform on the left-hand side. So we're always adding information to the tax reform page. We have a very dedicated group of individuals working on the web design, on guidance in the form of news releases, fact sheets, tax tips, and I'll make one pitch for our subscription services that you see there. You know, we have many, many tax professionals around the country on today's webinar. And we in the outreach function of IRS are always encouraging those tax pros to sign up for the weekly e-News for tax professionals. And particularly this year, with all of the significant changes under the new law impacting you and your clients, to get that information on a weekly basis, on Friday afternoons is very beneficial. If you're an industry, we have news for small business. Again, I recommend it because we're always looking to share this information on a regular basis. So check out our subscription services on

And with that, Phil, let me turn it back over to you for our question-and-answer period.

PHILIP YAMALIS: Thanks, Richard. Alright so, we'll continue with our question-and-answer session. I'll be your moderator for this session. We have two subject matter experts with us today to answer your questions from SBSE counsel we have Chuck Hall. And from Field Exam Small Business Self-Employed we have Program Manager, Joe Tiberio Gentleman, thanks for join us this afternoon. So before we begin the question-and-answer session, I want to mention again that we will not have time answer all the questions submitted during this webinar. However, let me assure you, we will answer as many as we have time for and we will at some time or another follow-up on many of your questions you asked today. Please note if you're participating to earn a certificate and related continuing education credit, you'll qualify by participating for at least 50 minutes from the official start time of this webcast. So unfortunately, you can't include the first few minutes of chatting we engaged in at the beginning of the session. Sorry about that. Alright everyone. Like I said we've received quite a few questions. So let me get started and let's get to as many as possible in the next few minutes.

So, let me begin with you, Joe. And I know we repeated it, but the specific publication for levies, since a lot of our audience may not be familiar with the collection process. Can you remind us what that specific publication where levies are covered? Joe, we might ask you to turn your microphone on there for us. JOE TIBERIO: Okay. Can you hear me now?

PHILIP YAMALIS: I sure can. Thank you. JOE TIBERIO: Great. Sorry about that. So during the presentation, publications, a couple were mentioned. Publication 4528, 4528, and 4235 were mentioned relative to this change specifically for the administrative claim for wrongful levies. But also there's a really good resource. Publication 594, is an overview of the collection process. And I think that would be very valuable for any practitioner who, especially, someone who does not routinely work on those kinds of cases, if they do have a client that's in a collection, involved with a collection action. So pub 4528, pub 4235 and finally publication 594. In addition to on there's a levy page which actually has all kinds of information about levies that's dealing with really almost anything, any questions would you have such as what is a levy? How do I avoid a levy? How do I get a levy release? What if a levy is causing a hardship, et cetera. I do also want to mention, I did talk about one of the publication numbers that I gave is the collection of advisory group numbers and addresses in each state. And that's going to be a really good resource for a practitioner who does needs to get a hold of someone in collection relative to a levy. Someone local to talk about their client's situation. PHILIP YAMALIS: Excellent, Joe. Thanks. Excellent references. And, again, key word search is "Levies" in the key word search box. This will get you right to that page. Excellent, Joe. Thank you for that. Chuck, let me ask you on depreciation. The question came in here. Do luxury autos qualify for bonus depreciation? So do they qualify for 100%?

CHUCK HALL: Yes, they do qualify for bonus depreciation. If bonus depreciation is elected, the allowable depreciation is decreased by $8,000 to $18,000 the first year. So if bonus depreciation is not elected, then the depreciation for first year would be just be $10,000. PHILIP YAMALIS: Okay. So just some clarification on bonus depreciation.

So we're saying now that you can now take the section 179 deduction for roofs, HVAC and security system and, et cetera? That's new? CHUCK HALL: Yes, one thing the Tax Cuts and Jobs Act did was change the definition for Section 179 property. And that includes certain improvements to non-residential real property placed into service after the property is placed into service. Now this would includes roofs, HVAC systems, fire protection systems, alarm systems, and security systems. So, yes,, those items are now eligible for a section 179.

PHILIP YAMALIS: Excellent. Excellent. Thanks, Chuck. Here, let me ask you another question. A question came in on like-kind exchanges Section 1031. How does the new law apply to intangible assets? JOE TIBERIO: Wow, that's a good question, Phil. And I think we touched on a little bit during the presentation. I think Richard covered that to a point.

But there was a lot of information there. So the big change here was the removal of personal property from the, as eligible for like-kind exchange. And so that personal property, we always think of that as vehicles, machinery, equipment, if things like that. But personal property, that definition for purposes of like-kind exchange also includes intangibles such as patents, intellectual property and such. And, so, those will no longer qualify for like-kind exchange treatment as a result of the new tax law effective 1/1 2018. PHILIP YAMALIS: Excellent. Alright let's take it to the Qualified Business Income deduction. A question asking for clarification. What forms do we use to figure the Qualified Business Income deduction in? JOE TIBERIO: Phil, that's a good question. So there's actually for tax year '18, there will not be a form, a numbered form you will typically expect to see.

Instead, there will be a worksheet in the Form 1040 instructions. The worksheet will, along with line-by-line instructions, that go along with that worksheet to do the computation. And for those, for some taxpayers, that worksheet in the 1040 instructions will satisfy most of our audience's clients. However, for those that have a more complex situation, maybe they're over the threshold or in part of the phase in or phase out within those threshold amounts, there will be a more involved worksheet. And that will be in a publication, which is yet to be released.

It'll publication 535. So that'll be coming out here in the near future. And regardless of whether you use the simple worksheet or the more complex one in the publication, you'll carry that amount, the deduction amount to the face of the 1040. Right directly to the 1040. It will have its own line. There will be a Qualified Business Income deduction line on form 1040 to claim that. And I think it was mentioned during the presentation, that's separate and apart from the standard deduction and the itemized deduction. So it will be a standalone for the deduction on the 1040 itself. PHILIP YAMALIS: Above the line then. So we'll see the deduction right on the 1040. Excellent. Excellent. Alright now I'm getting cued that that's all the time we have for questions, believe it or not. So no worries. We are going to look at your questions. We might even possibly see some Frequently Asked Questions added to our website.

We might even have a session again later to answer some of these questions. But most of all today, I want to thank our presenters, John Tuzynski, Richard Furlong for their excellent presentation and a big thank you to Chuck Hall, Joe Tiberio for answering some of our questions this afternoon. We really appreciate all of you for sharing your knowledge with all of us.

Thank you once again. John and Richard, before we close the question and answer session. What are some of the most important points that you want our attendees to remember from today's webinar? John, let me start with you. Go ahead. JOHN TUZYNSKI: Thanks, Phillip. The first thing I would say is the section 179 maximum deduction is now $1 million. And to the extent that an individual wants to claim the bonus depreciation, you can do it on used property.

Joe talked about the 199A deduction, it's in addition to the standard or itemized deductions.

And just remember if you're below those lower thresholds that we talked about, it doesn't matter if you're in one of those occupations as a specified service trade or business, you're going to get the deduction subject to the taxable income limitation. So. PHILIP YAMALIS: Awesome. Awesome. You're reemphasizing the point that we didn't like answer C there.

It was a false statement. So thanks again. I really appreciate that there, John. Richard, why don't you provide some of your most important points for us. RICHARD FURLONG: Certainly, Phil, and just to remind everyone that there is additional time now to contest a wrongful levy, that's been increased to two years if the IRS still has the levied money or has sold the levy property. However, if we still have the levy real property, there is no time limit to contest that levy. Like-kind exchanges as we discussed are limited now to real property. No longer can personal property whether they're tangible or intangible qualify for like-kind exchange treatment. As always, like-kind exchange real property must be of the same nature or character to qualify. A doubling of the gift and estate tax basically exclusion amount to $10 million from $5 million per decedent. And then finally a reminder about the interim guidance dealing with the changes to meals and entertainment. It's Notice 2018-76 which you can find again at And Phil, I'll turn it back over to you.

PHILIP YAMALIS: Thanks, Richard. Again excellent presentation John and Richard. Thank you so very, very much. For those of you that have attended today for at least 50 minutes, once again, after the official start time of the webinar, you will receive that certificate of completion that you can use with your credentialing organization for the possible CE credit. Again, if you're eligible for continuing education from the Internal Revenue Service and you registered with your PTIN, your valid PTIN number, your credit will be posted on your PTIN account. If you're eligible for continuing education from the California Tax Education Council We call it the CTEC. Your credit will be posted to that CTEC account as well. If you qualify and you have not received your certificate or don't see that credit posted by November 15th, simply email us at the address shown on the slide There's a lot of dots in there so make sure you see them. If you know someone that could benefit from the information shared today, please let them know that they'll be able to view this webinar on in approximately 4 weeks. As a reminder, we're not able to grant CE for webinars viewed on If you want to know who your local Stakeholder Liaison is, you can send us an email using the address shown on this slide. We'll send you that information. And once again, you can find the contact for your state by visiting and typing in the key word search Stakeholder Liaison. This part of today's Service's efforts is to provide with you timely topics and interesting speakers, we really appreciate if you take just a few minutes to complete a very short evaluation before you exit. If you have any requests for future webinar topics or pertinent information that you would like to see in an IRS fact sheet, a tax tip or frequently asked questions on, please include your suggestions in the comment section of the survey.

Trust me, we read every one of those comments. Or type it in the ask question feature on your viewing screen. Click the survey button on the left side of your screen to begin. Again, let me remind you if it doesn't come up, check to make sure you've disabled your pop-up blocker. We hope that you'll be able to join us for the webinars we'll be offering throughout the year as you can see we've got several upcoming webinars planned for the upcoming weeks. We hope that you'll be able to attend one or more of these webinars. Again, to register for these and other upcoming IRS webinars, visit using key word webinars and be sure to select webinars for tax practitioners or webinars for small businesses. We hope that you definitely look to your Stakeholder Liaison for information about policies, practices, procedures that the IRS uses to ensure compliance with tax laws. We also elevate issues that affect tax administration by using the issue management resolution system. So do reach out to your Stakeholder Liaison. Once again, ladies and gentlemen, it's been a pleasure to be here with you today. On behalf of the Internal Revenue Service, I'd like to thank you for attending today's webinar. It's important for the Internal Revenue Service to maintain strong partnerships with the tax professional tax community, with industry associations. As well as other federal, state, local government organizations. You indeed make our job a lot easier by sharing this information that allows for proper tax reporting. Once again, thanks again for your time and attendance. Much success in your business or practice, feel free to exit the webinar at this time. Good afternoon!