Tax Fundamentals of LLCs and Partnerships - Tax Staff Essentials
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Is LLC and partnership taxation something new to you? Perhaps you have worked in this area for years but need a quick review of the fundamental concepts? Use this CPE course to build a foundation of knowledge or freshen up your skills.
The course addresses the tax consequences of the most common transactions engaged in by LLCs and partnerships. Develop a level of comfort with the basic conceptual framework underlying partnership and LLC taxation, with an emphasis on explaining the tax consequences associated with issues that are most frequently confronted by tax practitioners.
This course will prepare you to:
- 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
- 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
- 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
- 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
- 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
- Recognize whether special allocations required under Section 704(c) have been made on a partnership or limited liability company (LLC) tax return
- 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
- 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
- Determine where each partnership item of income or deduction should be reported on the partnership income tax return
- 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
Who Will Benefit?
- Public accounting staff, seniors, supervisors, and tax professionals in company finance or tax departments
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Acquire the basic skills you need to prepare income tax returns for LLCs and Partnerships. This course helps you identify the information required from the accounting system and the questions to ask of managers or business owners. This course will provide you with a foundation of tax principles and rules applicable to flow through entities under IRC section subchapter K.
- Formation and the Check-the-Box rules
- Profit and loss allocations
- Effect of liabilities
- Contributions and distributions
- Reporting taxable income
When you complete this course you will be able to:
- Recognize differences among the various types of partnerships and an LLC.
- Describe how partnerships and LLCs opting to be treated as partnerships will report their federal taxable income to the IRS.
- Determine the tax basis of assets transferred to a partnership or LLC at formation.
- Explain the tax consequences and liabilities to a partnership/LLC of property transfers.
- Distinguish between distributions and compensatory payments to partners and recognize tax consequences of each type of payment.
- Apply the at-risk and passive activity loss limitations to pass-through losses from partnerships and LLCs.
Prerequisite: Three to five years of tax experience
Advanced Preparation: None.
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