Reviewing Partnership Returns

Objectives:

Learning Outcomes

• Calculate the balance in the partners' capital accounts and enter the results on Form 1065 and on the Schedule K-1s.
• Identify the purposes of Schedules L, M-1, and M-2.
• Recognize the tax treatment, both at the partner and the partnership level, of guaranteed payments to a partner.
• 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.
• Identify and report Section 1202 gains on Form 1065.
• Calculate the ordinary loss to the partners from the sale of Section 1244 stock.
• Determine how installment sales are taxed and disclosed by partnerships.
• Analyze the consequences when a new partner joins the partnership.
• Prepare a balance sheet following a revaluation of LLC or partnership assets.
• Make appopriate allocations of book and tax income following the entry of a new partner to a partnership during a taxable year.
• Compute book depreciation expense following the revaluation of a partnership's assets.
• Properly allocate depreciation expense among the contributing and noncontributing partners under Section 704(c).
• Apply the provisions of Section 737 and make associated adjustments to the basis of property retained by the partnership.
• Determine the tax basis of distributed property in the hands of the recipient partner.
• Calculate the required basis adjustments under Section 734(b) when a partnership distributes property to a partner in liquidation of his interest.
• Allocate the Section 734(b) adjustment, if any, among properties retained by the partnership following a distribution of property.
• Allocate nonrecourse liabilities among the partners in a partnership.

Major Topics:

Key Topics

Cover common errors made involving the following:

• Form 1065
• Schedules K and K-1
• Schedules M-1 and M-2
• Calculating recourse and nonrecourse liabilities
• Partner inside and outside basis
• Partner's capital account analysis
• IRC Sections 704(b), 704(c), 721, 722, 732(b), 734(b), 737, 743(b)

Designed For:

Who Will Benefit

• Partners and managers in CPA firms
• Experienced CPA staff

Prerequisite:

Basic knowledge of partnership taxation