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

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

Major Topics:

• 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)

Major Topics:

• 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)

Designed For:

Prerequisites: