Course ID: GKPA4

Getting to the K-1: Partnership Allocations under 704(b) and 704(c)

Partnerships are incredibly flexible tax devices, allowing many options in determining what appears on each partner’s K-1. IRC 704(b) and (c) determine, in combination with the partnership agreement, the numbers that appear on each partner’s Schedule K-1. In this course we’ll take a look at the responsibilities a CPA has in calculating the proper allocations to each partner. We’ll look at the mandatory adjustments for precontribution built-in gains or losses of each partner and the requirements to have partnership special allocations respected.


LEARNING OBJECTIVES
  • Recognize when the mandatory rules of 704(c) apply to contributions of property to a partnership Calculate proper allocation under each of the three safe-harbor methods of handling 704(c) List the requirements for an allocation to have substantial economic effect under the partnership regulations

MAJOR TOPICS

The difference between items impacted by 704(b) and 704(c) How to apply the traditional method, traditional method with curative allocations and the residual method for contributed property Situations that trigger a “reverse 704(c)” allocations How to compute the partners’ 704(b) book capital accounts and why it matters Applying a qualified income offset


DESIGNED FOR
CPAs responsible for advising partnerships on tax matters or preparing Schedule K-1s.

FIELD OF STUDY
Taxes

PREREQUISITES
Five years experience in taxes including some work with partnerships

COURSE PRODUCER
Loscalzo Associates

CPE CREDITS
4.0

LEVEL
Update

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