Partnership and LLC Core Tax Issues From Formation Through Liquidation (PLTI)

Overview

As staff members gain more experience, they are expected to take on more complex assignments with minimal supervision. This course is designed to be a steppingstone for staff interested in pursuing more advanced partnership and LLC issues than mere preparation. The material provides a deep life-cycle study into critical areas of formation, special allocations of income and deductions, basis calculations and implications of recourse and nonrecourse debt, basis step-up under §754 on tra¬nsfers of ownership interest, distributions, self-employment tax issues, and termination and liquidations of an LLC. With a blend of legal and tax ramifications regarding LLC-specific issues, this course identifies all the major areas that are potential sources of increased complexity.

Major Topics:

• Reporting requirements for Schedules K-2 and K-3
• Capital account reporting requirements
• Schedule K-1 reporting for §743 adjustments
• Schedule K-1 reporting for §704 gains and losses
• Comprehensive case on partnership/partner application of the business interest deduction
• Section 704(b) basis versus tax basis for capital accounts
• Detailed rules of §704 for preventing the shifting of tax consequences among partners or members
• Unreasonable uses of the traditional and curative allocation methods
• Layers of §704(c) allocations
• Treatment of recourse versus nonrecourse debt basis
• How to calculate basis limitations and the implications on each partner’s own tax return
• How §179 limitations affect partnership/LLC basis
• Regulations for handling basis step-ups under §754 elections and mandatory adjustments under §743 and §734 for partnerships that have not made a §754 election
• Subsequent contributions of property with §754 adjusted basis to another partnership or corporation
• Capital account adjustments in connection with admission of new members
• Special allocations and substantial economic effect
• LLCs and self-employment tax to members
• Distributions – current or liquidating, cash or property, and the substituted basis rule
• Termination and liquidation of an LLC

Learning Objectives:

• Prepare complicated partnership returns
• Understand certain advanced concepts of partnership taxation