The aggregation rules are one of the best features of the new tax law (TCJA 2017). These rules allow taxpayers to combine their trades or businesses, if they meet certain requirements, and treat them as a single trade or business for purposes of the section 199A calculation. This can result in a larger tax deduction than if the calculations were done separately for each business.
Why you need to talk to a tax attorney: What you choose to do NOW (tax filings for tax year 2018) MATTERS as it will be reported annually.
Why you need to consult with a tax advisor: Failure to disclose an aggregation on the required annual attachment may result in disaggregation by the IRS. If the IRS exercises this right, the taxpayer is prohibited from aggregating those trades or businesses for the subsequent three taxable years.
The decision whether or not to aggregate requires a complex and detailed analysis. While aggregation may be beneficial for some individual taxpayers, it also has the potential to be detrimental for others. Additionally, since an aggregation is binding on future years, taxpayers must carefully consider whether an aggregation that is beneficial in the current year is likely to be so in the future.
Failure to accurately apply the rules of Section 199A could result in a loss of some or all of the potential benefit. Consequently, the ability to aggregate does not relieve these taxpayers from their obligations to satisfy the requirements of Section 199A and the final regulations.