To provide tax and other financial professionals who prepare partnership returns or advise clients on partnership issues with in-depth knowledge of complex tax allocation rules, especially under Sections 704(b) and (c). Using case studies, participants will analyze partnership agreements, learn to avoid tax surprises and be able to advise clients to assure correct returns.
DETAILED LEARNING OBJECTIVES
• Identify deductions subject to limitations at both the partnership and individual partner levels
• Determine how a partner’s outside basis affects losses distributions and transfers of partnership interests
• Recognize the potential benefits of electing exclusion from Subchapter K
• Identify the default federal tax classification of a single member LLC
• Determine when a partnership meets the tax shelter definition based on losses allocated to limited partners
• Identify the form used to report a partner’s share of partnership items
• Distinguish separately stated partnership items from ordinary business income
• Identify the characteristics of guaranteed payments made to partners
• Recognize the general tax treatment of property contributed in exchange for a partnership interest
• Identify transactions excluded from the nonrecognition provisions of Section 721
• Determine when transfers between a partner and partnership are presumed to constitute a disguised sale
• Calculate gain recognized when contributed property is subject to liabilities
• Distinguish a capital interest from a profits interest received in exchange for services
• Determine when a partner recognizes income from receiving a restricted capital interest
• Identify circumstances in which a partner may bear personal liability for partnership debt
• Distinguish nonrecourse liabilities from recourse liabilities
• Apply the Section 752 rules governing partner payment obligations
• Determine the treatment of partnership debt when a payment obligation forms part of a plan to circumvent the Section 752 rules
• Identify the tier under which partnership minimum gain affects the allocation of nonrecourse liabilities
• Recognize the substantial economic effect requirement for partnership allocations
• Determine how partnership items are allocated when an allocation lacks substantial economic effect
• Identify the time allowed for a partner to restore a deficit capital account following liquidation
• Determine which items increase a partner’s economic capital account
• Distinguish actions that restore a deficit capital account from actions that increase the deficit
• Identify the statutory authority governing minimum gain allocations
• Define partnership minimum gain associated with nonrecourse liabilities
• Recognize the requirements for allocating nonrecourse deductions according to the partners’ interests in the partnership
• Identify the small disparity exception under Section 704(c)
• Apply the seven year rule to distributions of contributed property under Section 704(c)(1)(B)
• Identify contributed property subject to the Section 704(c) allocation rules
• Calculate the built in gain allocated to a contributing partner under Section 704(c)
• Recognize the flexibility available when selecting a reasonable Section 704(c) allocation method
• Identify acceptable methods for making Section 704(c) allocations
• Compare the traditional method with the traditional method using curative allocations
• Identify the conditions that permit the IRS to recast a partnership transaction under the anti abuse regulations
• Recognize the requirements for partnership transactions to remain consistent with Subchapter K
• Determine the authority available to the IRS when recasting an abusive partnership transaction
• Identify items excluded from qualified business income under Section 199A
• Determine the basis of property received in a current partnership distribution
• Determine the basis of property received in a liquidating partnership distribution
• Recognize the general nonrecognition treatment of property distributions at the partnership level
• Distinguish guaranteed payments from salaries and other payments made to partners
• Determine the tax treatment of guaranteed payments to the partnership and receiving partner
• Determine the tax consequences of a current cash distribution that does not exceed a partner’s outside basis
• Calculate the basis available for noncash property when a current distribution includes cash and property
• Identify when a draw against a partner’s distributive share is treated as occurring for tax purposes
• Explain the purpose of a Section 754 election following the transfer of a partnership interest
• Identify the steps used to calculate and allocate a Section 754 basis adjustment
• Determine the filing deadline for making a Section 754 election
• Identify the deadline for requesting revocation of a Section 754 election
