Times: 8:30 AM - 5:00 PM

DAY ONE

INTRODUCTION TO PARTNERSHIPS
• Partnership entity
• Key aspects of partnership law and tax implications
• Review types of partnerships and Limited Liability Companies/Partnerships
• Electing out of Subchapter K
• Check-the-box regulations

OPERATIONAL ISSUES
• Tax year and accounting methods
• Items required to be stated separately
• Partnership and partner elections
• Other operational issues

FORMATION OF THE PARTNERSHIP
• Introduction
• Contributions of property and cash, no gain or loss
• Contribution of property if fair market value and basis differ under Section 704(c) rules
• Contribution of services in exchange for a partnership interest

BASIS IN THE PARTNERSHIP INTEREST
• Introduction
• Inside and outside basis, basis vs. capital accounts
• Determination of the partner’s basis in the partnership interest
• Definition of liability for partnership purposes and allocation among partners
• Review examples/case study
• IRS court case discussion
 

DAY TWO

DISGUISED SALES RULES
• Introduction—potential inequity of the tax rules
• Disguised sales rules and exceptions described
• Liabilities and disguised sales rules, tax return disclosure
• Property distributions that follow contributions of appreciated property

IDENTIFICATION & TREATMENT OF SECTION 751 HOT ASSETS
• Application of the rules, definition of hot assets
• Tax treatment in section 751 transaction and reporting requirements

PARTNERSHIP TAXABLE INCOME: A LOOK AT THE K-1
• Partnership as a pass-through entity
• At-risk rules under IRC 465
• Partnership and LLC issues and K-1s
• Review Form 1065, Schedule K and Schedule K-1 and instructions

PARTNER’S DISTRIBUTIVE SHARE OF PARTNERSHIP ITEMS
• Allocations under partnership agreement must have substantial economic effect, section 704(b)
• Review of problem areas
• Anti-Abuse Regulations 1.701-2(b)
• Elections by partnerships
• Case study
• IRS Tax Court Case discussion
 

DAY THREE

DISTRIBUTIONS FROM PARTNERSHIPS
• Overview of distributions
• Taxation of current distributions, cash, securities, and/or property
• Taxation of liquidating distributions

SALE OF PARTNERSHIP INTERESTS, TERMINATIONS & LIQUIDATIONS
• Purchase, sale or redemption of partnership interests
• Retiring partner’s or successor’s share
• Termination of partnership
• Distributions in liquidation of a partnership interest

SECTION 754 OPTIONAL BASIS ADJUSTMENTS (STEP UP) UPON SALE OR TRANSFER
• Theory for Optional Basis Adjustment
• Section 754 Election
• Mandatory basis adjustments under Section 743 and Section 734

PASSIVE LOSS RULES
• Background
• Definition of Activity and Material Participation

TAX PLANNING DISCUSSIONS
 

DAY FOUR

REVIEW THROUGH PROBLEM SOLVING
• Prepare simple Form 1065, K-1
• Complete Partner Basis Worksheet

INVESTMENT PARTNERSHIPS
• Discussion and problem solving

IRS CASE STUDY

REAL PROPERTY TRADES OR BUSINESSES
• Formation and basis of a real estate partnership
• Operating income and expenses
• Deductibility of losses, passive losses
• Distributions from partnerships, taxability
• Like-kind exchanges, installment sales, lease transactions

CASE STUDY/IRS TAX CASE REVIEW

CLIENT ENGAGEMENT LETTER DISCUSSION/SCOPE

WRAP-UP

William C. Briggs, CPA, is a Tax Partner of Carrow, Doyle & Associates, a regional CPA firm located in Pennsylvania, and former Senior Tax Manager for KPMG Peat Marwick. He is an expert in partnership and real estate taxation, the tax aspects of S corporations, estate planning and tax accounting. Mr. Briggs has been a guest speaker for various trade organizations and accounting groups.

William C. Briggs, CPA, is a Tax Partner of Carrow, Doyle & Associates, a regional CPA firm located in Pennsylvania, and former Senior Tax Manager for KPMG Peat Marwick. He is an expert in partnership and real estate taxation, the tax aspects of S corporations, estate planning and tax accounting. Mr. Briggs has been a guest speaker for various trade organizations and accounting groups.

• Identify factors which may affect the choice of entity

• Identify the tax characteristics generally associated with partnership taxation

• Identify the entities taxed as a partnership by “default” absent a different “Check the Box Regulations” choice

• Recognize individual vs. aggregate partnership taxation concepts

• Recognize the significance of a partner’s basis in his partnership interest

• Recognize the requirements for electing out of Subchapter K

• Recognize the tax treatment of single member LLCs

• Identify a partnership’s options as to a tax year end

• Identify a partnership’s options as to methods of accounting

• Identify the Section 267 limitations on an accrual method taxpayers’ deferral of the deduction for items payable to a related cash basis taxpayer

• Identify items least likely to be reported separately by a partnership

• Identify elections typically made at the partnership and partner level

• Identify the tax treatment of a partnership’s guaranteed payments

• Recognize the factors determining whether or not limited partners or LLC members are subject to self-employment tax

• Recognize the rules for partners’ ability to deduct health insurance payments paid by the partnership

• Recognize the requirements for a partnership to complete the Schedule M-3

• Identify the tax consequences of the exchange of property for a partnership interest under Section 721(a)

• Identify the exceptions to the general nonrecognition provisions of Section 721(a)

• Identify the characteristics of a partnership investment company

• Identify the characteristics of disguised sales

• Recognize the circumstances under which gain will be recognized upon the contribution of encumbered property in exchange for a partnership interest

• Recognize the consequences of a partner’s contribution of services for an interest in a partnership

• Recognize the components of a partner’s basis in his partnership interest

• Recognize the limitations on a partner’s ability to deduct his share of allocated partnership losses

• Recognize those factors that will increase and decrease a partner’s basis in his partnership interest

• Identify which individuals within partnerships are typically personally liable for entity debt

• Identify the conceptual method by which recourse debt is allocated

• Identify the characteristics of nonrecourse debt

• Recognize the seven factors necessary to ensure a partner’s payment obligation will be treated as recourse debt

• Identify and characterize the three tiers of nonrecourse debt

• Identify the tax implications of the contribution of property to a partnership in exchange for a partnership interest

• Identify the criteria for disguised sale treatment

• Recognize the tax implications of a disguised sale

• Recognize the characteristic and tax implications of guaranteed payments

• Recognize partnership “hot assets” and their implications upon distribution to a partner

• Identify the deduction available to qualifying partners under the Section 199A rules

• Identify the basic calculations used to determine the Section 199A deduction

• Recognize the circumstances under which rental real estate may qualify for the Section 199A deduction

• Identify the circumstances under which trades or businesses may be aggregated for purposes of Section 199A

• Identify the significance of a partner’s at risk basis and its implications for partnership allocations of loss

• Identify the components of a partner’s at risk basis

• Identify the components of a partner’s outside basis and its tax implications

• Identify the characteristics of the new partnership audit regime under the Bi-Partisan Act of 2015

• Recognize the elements of a partnership agreement necessary for the IRS to respect the partner allocations of partnership items

• Recognize the characteristics of the Section 704(b) economic effect safe harbor rules

• Recognize the implications of deficit restoration obligations and qualified income offsets

• Recognize the rules for the allocation of nonrecourse debt

• Recognize the contribution of property rules under Section 704(c)

• Recognize the allocation methods available under Section 704(c)

• Identify the partnership anti-abuse regulations authorizing the IRS to re-characterize a partnership transaction ­

• Identify a partner’s basis in property received from a partnership in a current property distribution

• Identify a partner’s basis in property received from a partnership in a liquidating property distribution

• Identify the tax ramifications to a partnership when distributing partnership property to a partner

• Identify the tax implications of partnership guaranteed payments

• Identify the tax implications of a partnership distribution of cash and/or marketable securities

• Recognize the rules for allocating partnership items when a partner’s interest varies during the partnership’s tax year

• Recognize the tax ramification to a partner when selling or transferring his partnership interest

• Recognize the conceptual purpose of the Section 754 election

• Recognize the mechanics of a Section 754 step up in basis

• Identify what activities are considered to be passive activities in the context of partnership taxation

• Identify the rules for the deductibility of passive activity losses

• Identify those circumstances that allow a taxpayer to deduct suspended passive losses

• Identify the factors used to determine whether or not an activity or a group of activities constitutes an appropriate economic unit

• Identify the tax implications of transactions unique to real estate partnerships

• Recognize the tax advantages of using LLCs in mergers and acquisitions

• Identify how the limitation on net business interest expense under Section 163(j) is applied to partnerships

• Recognize planning opportunities available to the owners of flow through entities under Section 199A

• Recognize taxation rules unique to real estate partnerships

• Identify the method of allocating the purchase price of acquired property under Section 1060

• Identify the capitalization rules of Section 263A

• Identify the capitalization rules of Section 266

• Recognize the tax treatment of common area cost