Get up to speed quickly on partnership and LLC formation, as well as preparation issues and calculating a partner’s and LLC member’s basis. Take a line-by-line analysis of Form 1065 Schedule K and K-1 and how these items affect the partner’s or member’s individual income tax return. Each attendee will receive a comprehensive reference manual that includes practice aids and real-world examples and case studies.
Be able to form a partnership and calculate its initial inside basis in the assets and partner’s outside basis in the entity.
Prepare a basic partnership (Form 1065) Schedule K including reporting of cash and non-cash distributions.
Determine how Schedule K items get allocated to partners/members on their individual Schedule K-1.
Identify the three main reasons for calculating a partner’s or member’s basis in a partnership/LLC.
Calculate a partner’s tax basis capital account (as required on the 2020 form 1065)
Calculate a partner’s or member’s outside basis and determine if losses and deductions are limited on their individual income tax return.
Emphasize any new legislative changes affecting partnerships and partners
Review the Form 1065 to learn how income statement items get reported on the partnership/LLC tax return (i.e., page 1 versus Schedule K) and flow-thru to the partner/members on Schedule K-1
Analyze the Schedule K-1 line-by-line and discuss where the items get reported on the individual’s Federal income tax return and how the items affect the partner/member’s outside basis
Look at what relevant information related to the 3.8% net investment income tax needs to be reported to the partners/members
Formation issues including the mandatory allocation of the §704(c) pre-contribution gain or losses back to the contributing partner/member
The purpose of tax and §704(b) book capital account
Reporting recourse and non-recourse debt on the Schedule K-1
Tax ramifications and reporting of cash and non-cash distributions including disproportionate distributions of “hot assets”
Overview of the §754 election for optional basis adjustments triggering §743 (transfer of interests) and §734 (distributions)
Tax professionals who need an in-depth training course on tax preparation issues, basis calculations, reporting of tax basis capital accounts and distributions rules for partnerships, LLCs and their owners.