Intermediate Partnership Taxation

Author: James R. Hamill

The fastest growing tax reporting entity is the LLC taxed as a partnership. Tax practitioners now see partnership tax vehicles used by any type of taxpayer, including large corporations. The flexibility of partnership taxation has much to do with their use, but the distinctions between the “aggregate” and the “entity” approaches create significant uncertainty in many transactions.

This session is “Part II” of a two-part program on partnership taxation. This session will take a deeper dive into some of the more complicated issues in partnership tax reporting and tax planning, including special allocations and how to use them, nonrecourse debt shares, and special problems with distributions.

In this four-hour CPE course nationally recognized tax expert and instructor James Hamill, CPA, Ph.D., will explain the best tax-planning strategies for partnership taxation. The session will address two types of allocations – safe harbor and targeted, when Section 704(c) controls allocations, the three-step approach to sharing nonrecourse liabilities, disguised sales, distributions of marketable securities, and distributions that may accelerate recognition of Section 704(c) gains.

Publication Date: November 2021

Designed For
CPAs, EAs, tax preparers and other tax professionals with responsibility for assisting clients with partnership tax returns and tax-planning strategies.

Topics Covered

• Section 704(b) allocations
  • Special allocations
• Section 704(c) Allocations
  • Precontribution or preadmittance gains and losses
  • Distinguish 'my' gain from 'our' gain
• Determining Liability Shares
• Changes in debt shares are deemed contributions/distributions Regulations tell us how to determine 'shares'

Learning Objectives

• Describe major concepts relating to contributions to partnerships, basis calculations, transactions between partner and partnership, payments to a retiring partner, distributions of partnership property, and terminations
• Recognize the treatment of partnership liabilities
• Identify pertinent issues relating to unrealized receivables and substantially appreciated inventory
• Describe important rules and concerns relating to special allocations
• Discuss important features of the 704(b) and 704(c) regulations
• Identify computational and planning issues for the Section 199A deduction
• Recognize how to allocate items of profit and loss
• Describe how to make special allocations that work
• Identify special problems with distributions
• Recognize how to maintain Section 704(b) capital and why
• Identify and apply the SEE test
• Describe safe harbor allocations and how they apply
• Recognize three requirements with respect to economic effect
• Describe correct statements regarding Section 704(c) allocations
• Identify ways in which a risk of loss can arise
• Differentiate types of deductions
• Recognize what safe harbor requires
• Identify which type of capital account should be maintained for reporting on Schedule K-1
• Describe which type of capital account a book-up is valid for
• Recognize what recourse liabilities require

Level
Intermediate

Instructional Method
Self-Study

NASBA Field of Study
Taxes (4 hours)

Program Prerequisites
Basic understanding of partnership taxation.

Advance Preparation
None