Partnership Preparation, Basis Calculations & Distributions - Form 1065 Schedule K & K-1 Analysis

Overview

This comprehensive training is designed to get the accountant up to speed quickly with partnership and limited liability company (LLC) formation and preparation issues as well as a complete understanding of calculating a partner and LLC member’s basis. The cornerstone of this course is the in-depth line-by-line analysis of the Form 1065 Schedule K and K-1 and how these items affect the partner/member’s individual income tax return.

**Please Note:  If you need credit reported to the IRS for this IRS approved program, please download the IRS CE request form on the Course Materials Tab and submit to kori.herrera@acpen.com

Highlights

• Extensive review of the partnership tax laws with an emphasis on any new legislative changes
• Review the Form 1065 to learn how income statement items get reported on the partnership/LLC tax return (i.e., page 1 versus Schedule K) and flow-thru to the partner/members on Schedule K-1
• Analyze the Schedule K-1 line-by-line and discuss where the items get reported on the individual’s Federal income tax return and how the items affect the partner/member’s outside basis
• Look at detailed Schedule K-1 information reporting to partners/members needed for the qualified business income (QBI) deduction, 3.8% net investment income tax and business interest expense limitations
• Formation issues including the mandatory allocation of the §704(c) pre-contribution gain or losses back to the contributing partner/member
• Calculating the tax and §704(b) book capital accounts
• Reporting recourse and non-recourse debt on the Schedule K-1Tax ramifications and reporting of cash and non-cash distributions including disproportionate distributions of “hot assets”
• Overview of the §754 election for optional basis adjustments triggering §743 (transfer of interests) and §734 (distributions)

Prerequisites

Background in partnership and individual income tax law

Designed For

Tax professionals that need an in-depth training course on tax preparation issues, basis calculations and distributions rules for partnerships, LLCs and their owners.

Objectives

• Form a partnership and calculate the partnership’s initial inside basis in the assets and partner’s outside basis in the entity
• Prepare a basic partnership (Form 1065) Schedule K including the reporting of cash and non-cash distributions
• Understand how the schedule K items get allocated to the partners/members on their individual Schedule K-1
• List the three main reasons for calculating a partner/member’s basis in a partnership/LLC
• Calculate a partner/member’s outside basis and determine if losses and deductions are limited on their individual income tax return

Preparation

Background in individual and business income tax law