If you're looking for a comprehensive and hands-on guide to partnership taxation, look no further. This practical course examines tax issues relating to the formation and operation of partnerships. You will gain a familiarity with basic areas of partnership taxation so that you can recognize problem areas and find workable solutions. The materials are presented in four segments: (1) the formation of partnerships, (2) the basic day-to-day operations of partnerships, (3) distributions of assets to partners, and (4) the termination of partnership affairs.
Upon successful completion of this course, participants will be able to:
- Recognize what constitutes a partnership for federal income tax purposes under §761(a), including factors that determine partnership existence, the liability aspects of partners, applicable reporting requirements, and check-the-box regulations
- Recognize the impact of partnership agreements on partners' shares of tax items, the requirements of §704(e) to family partnerships, and the pros and cons of partnerships in determining when the entity choice is appropriate
- Identify the complete or partial exclusion from partnership treatment under §761
- Recognize the allocation of income and deductions among partners, when a partnership or its partners are subject to income or estimated tax, applicable self-employment taxes under §1402, and instances where partnerships are viewed as separate entities
- Identify the types of separately stated partnership expenses and the character of such items, their deduction limitations, and the §704(d) outside basis limitation and its impact on losses
- Recognize whether a partnership can elect to amortize certain business-related expenses, the key elements and requirements of the partnership tax return, and the items of deduction to which individuals are entitled
- Identify a partnership's taxable year under §706(a) and the allocation of items of income and deductions from the partnership to the partners
- Classify the treatment of transactions between a partner and a partnership
- Recognize the tax-free capitalization rules of §721 including the treatment of contributions, sales, exchanges, and transfers, the application of property taint rules, and methods of allocation for precontribution gain or loss
- Determine a partnership's basis for contributed assets under §723 and the treatment of subsequent gains and losses under §724
- Recognize the tax treatment and subsequent consequences of contributed services including strategies to avoid immediate taxation
- Determine the original and adjusted basis of an interest acquired by contributing property and/or money
- Recognize a partner's loss deduction when the limits on deductions of partnership losses apply
- Determine capital asset treatment on the sale or disposition of a partnership interest under §741
- Recognize the tax treatment of a sale or exchange of a partnership interest where the partnership possesses hot assets, the characteristics of unrealized receivables and inventory, and which items qualify or fail to qualify as unrealized receivables
- Recognize optional basis adjustment provisions and how they relate to the general rule for the inside basis after the transfer of a partnership interest, the tax consequences of making a gift of a partnership interest, and the unique treatment of partnership interests that are abandoned or foreclosed on with or without related liabilities
- Recognize the provisions, tax treatment, and impact of distributions of cash or property by a partnership to the partners
- Recognize the types of liquidating distributions, the treatment of cash distributions under §736, and the tax treatment of property distributions in liquidation permitting partnerships to distribute unrealized receivables or inventory
- Identify a withdrawing partner's basis when there are distributions in liquidation or in nonliquidation, the requirements of a §754 election, and any additional required adjustments
- Recognize the taxation of limited liability companies, the variety of tax entity choices, and their advantages and disadvantages
- Identify ways to use an LLC, business-planning opportunities, and business ventures that should avoid LLCs
- Recognize the federal tax consequences of establishing an LLC, check-the-box regulations, self-employment tax regulations and their application, whether an LLC member is at risk for recourse debt, the treatment of debt discharge income, passive loss rules, appropriate method of accounting, and how an LLC can designate a tax matters partner for audit purposes
- Identify the dangers and tax consequences in converting to an LLC from another form of entity, and the potential assessment of sales and use tax, real property taxes, and real property transfer taxes on entities on conversion to an LLC
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