Taxation Essentials of LLCs and Partnerships
Freshen up your skills in LLC and partnership taxation with a quick 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.
This course will prepare you to do the following:
- 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 LLC at formation.
- Recognize the tax consequences of a transfer of liabilities to a partnership or LLC in conjunction 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 an 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 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 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 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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