Allocating Partnership/LLC Income, Losses and Debt to Partners

Course Details

Date

Friday, November 8, 2019

4:30am – 8:00am
(Registration: 4:00am)

Field of Study

Taxation

Course Number

4193338E

CPE Credit

4.0 hours CPE credit

Level of Knowledge

Intermediate

Vendor

CalCPA Education Foundation

Prerequisites

General knowledge of partnership taxation.

Description

The course focuses on three major issues that involve allocations by partnerships to partners:  (1) assuring that allocations to partners have substantial economic effect under section 704(b); (2) the proper treatment of forward and reverse built-in gains or losses under section 704(c); and (3) the proper characterization of debt and the appropriate allocation of such debt to the partner/LLC members pursuant to section 752.

Attendees will review case studies illustrating the inherent interrelationship of these three subjects and review sample partnership/LLC agreement language.

Note: Course materials include an e-book and PowerPoint slides that reinforce concepts and will be available to attendees.

Materials are provided as an ebook for this course.

Highlights

  • Allocating income, gain, deductions and losses under section 704(b).
  • Understanding the Target Capital Account Method and comparing it to the Treasury Method.
  • Allocations of built-in gain or loss pursuant to section 704(c).
  • Properly characterizing debt as recourse, nonrecourse, or qualified nonrecourse financing.
  • Allocating debt to the partners pursuant to section 752.

Objectives

  • Understand when allocations to partners have "substantial economic effect".
  • Recognize the difference between book and tax basis capital accounts.
  • Distinguish the Treasury Method from the Target Method of allocating profits and losses to partners and understand the pros and cons of the two methods.
  • Understand when and why a partners have a negative capital account.
  • Recognize terminology in partnership agreements such as “partnership minimum gain," “partner minimum gain," “partnership nonrecourse deductions” and “partner nonrecourse deductions."
  • Recognize and understand the importance of a “minimum gain chargeback” and a “qualified income offset” in a partnership agreement.
  • Determine when capital accounts can be optionally revalued and the impotance of such revaluation.
  • Identify the “ceiling rule” and understand the three regulatory methods of making section 704(c) allocations.
  • Distinguish recourse debt from nonrecourse debt, and qualified nonrecourse financing.
  • Determine how to properly report each partner’s debt share on IRS Schedule K-1.

Designed For

Attorneys and CPAs.

Course Pricing

Member Fee

Applicable if you are a HSCPA member in good standing.

$120.00
Non-Member Fee

Applicable if you are not a HSCPA member.

$188.00
Your Price $188.00

CPE Choice

Learn more about CPE Choice.
This course does not qualify for CPE Choice.

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