Course ID: TSETFLP

Tax Fundamentals of LLCs and Partnerships – Tax Staff Essentials

Freshen up your skills in LLC and partnership taxation with a thorough review of the fundamental concepts. This CPE course addresses the tax consequences of the most common transactions engaged in by LLCs and partnerships. You will receive practical guidance on the basic conceptual framework underlying partnership and LLC taxation with an emphasis on explaining the tax consequences most frequently confronted by tax practitioners. Course materials include the impact of the Tax Cuts and Jobs Act of 2017 (TCJA) tax reform law.


LEARNING OBJECTIVES
  • Recognize the basic differences between the various types of partnerships and LLCs.
  • Identify the effects of investor contributions and distributions on their basis in a partnership or LLC interest.
  • Determine how partnerships and LLCs opting to be treated as partnerships report their federal taxable income to the IRS and to investors.
  • Indicate how investors in partnerships and LLCs report their shares of entity income and loss for tax purposes, and how those shares affect the basis of their investments in the entity.
  • Calculate the tax basis of assets transferred to a partnership or limited liability company (LLC) at formation.
  • Recognize the tax consequences of a transfer of liabilities to a partnership or LLC in connection with property transfers at formation.
  • Identify the required tax year for a partnership or LLC.
  • Determine the tax consequences associated with the exchange of an interest in a partnership or LLC for services.
  • Distinguish between current and liquidating distributions.
  • Determine the basis in the investor’s hands of property received as a distribution from a partnership or limited liability company (LLC).
  • Calculate the partner’s or member’s remaining basis in his or her interest following a distribution of cash or property from the partnership or LLC.
  • Indicate the effects of liabilities assumed by a partner or LLC member in connection with a property distribution.
  • Determine the proper tax treatment of retirement payments to a partner.
  • Determine whether payments to a partner will be treated as guaranteed payments, distributive shares, or payments to a third party.
  • Identify the tax treatment of payments to a partner in his or her capacity as a third party.
  • Recognize the tax treatment, both at the partner and the partnership level, of guaranteed payments to a partner.
  • Calculate the amount of the guaranteed payment when the partner is to receive the lesser of a fixed dollar amount or a fixed percentage of partnership income.
  • Indicate the correct treatment of partnership income by a partner for self-employment tax purposes.
  • Differentiate the limitations that apply to partners’ or limited liability company (LLC) members’ distributive share of losses from those of a partnership or LLC.
  • Identify the treatment of deductions that are denied under different limitation provisions.
  • Calculate the basis and amount at risk in a partnership or LLC interest for purposes of those loss limitation rules.
  • Distinguish between a passive activity that would be subject to the passive loss rules, and an active activity that would not be subject to passive activity rules.
  • Determine whether special allocations called for in a partnership agreement will be allowable under the Section 704(b) regulations, and when they will not be recognized by the IRS.
  • Distinguish the difference between “book” allocations required under Section 704(b) and “tax” allocations required under Section 704(c).
  • Identify the potential economic consequences to a partner or LLC member of a special allocation.
  • Recognize the relationship between partnership and LLC allocations of profit and loss and the allocation of the risks and rewards of entity operations.
  • Identify the types of special allocations that are allowed in a family partnership context and those that are not.
  • Identify the federal income tax forms that must be filed with the IRS by an average partnership or limited liability company (LLC), and what forms must be sent to the investors.
  • Recognize what information should be disclosed on a Schedule K-1 received from a partnership or LLC.
  • Determine where each partnership item of income or deduction should be reported on the partnership income tax return.
  • Indicate how the information provided on Schedule K-1 can be used to calculate the adjustment to a partner or LLC member’s basis and amount at-risk.

MAJOR TOPICS
  • Basic tax structure of partnerships and LLCs
  • Electing to be taxed as a partnership: The “check-the-box” rules
  • Tax consequences of partnership or LLC formation
  • Partnership distributions
  • Compensatory payments to partners
  • At-risk and passive activity limits
  • Profit and loss allocations: general rules and restrictions
  • Reporting taxable income for partnerships and LLCs

DESIGNED FOR
Public accounting staff, seniors, supervisors, and tax professionals in company finance or tax departments

FIELD OF STUDY
Taxes

PREREQUISITES
None

COURSE PRODUCER
AICPA

CPE CREDITS
8.0

LEVEL
Basic

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