Basis Calculations for Partnerships and LLCs

Book-ups, Step-ups, At-Risk Amounts, Allocating Liabilities, and Recourse and Non-Recourse Debt

Recording of a 110-minute CPE webinar with Q&A


Conducted on Wednesday, January 15, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will provide tax preparers and professionals advising partnerships and LLCs with a solid foundation for the calculation and maintenance of partners' basis accounts. The panel will discuss book-ups, step-ups, at-risk rules, and the corresponding debt allocations of recourse and non-recourse debt.

Description

Partnership basis account maintenance is not only likely the most complex, but also the most critical calculation for partners investing in LLCs and partnerships; it establishes the basis for deducting losses under Section 704(d). Unlike capital accounts which can show deficits or negative balances, a partner's basis cannot drop below zero. As of the 2018 tax year, taxpayers must disclose negative tax basis capital accounts on partners' Schedule K-1s. Understanding the interplay between capital accounts and basis is critical for tax advisers to partnerships.

Unlike reporting for other entities, contributions and distributions to partnerships are measured using an adjusted basis for tax basis. When a new partner buys in, however, partners' capital accounts may be booked-up to reflect its fair market value and other partners' capital accounts adjusted accordingly.

Similarly, Section 754 allows a partnership to step-up the basis of assets when there is a transfer of a partnership interest. This can reconcile inside and outside basis differences in partnership interests but, once made, is mandatory and could require future step-downs.

Listen as our panel of experts explains tracking partnership basis, including annual allocations of income, losses, and tax-exempt items, step-ups, book-ups, and at-risk rules including allocating recourse and non-recourse debt.

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Outline

  1. Types of partnerships
  2. Annual increases and decreases to basis
  3. The interplay of basis and capital accounts
  4. Section 754 step-ups
  5. Book-ups
  6. At-risk amounts and Form 6198
  7. Best practices for tracking partners' basis

Benefits

The panel will review these and other crucial questions:

  • What complexities should tax preparers be aware of when calculating basis for pass-through entities?
  • What are the increases and decreases to consider for the basis calculation?
  • When should a partnership's assets be stepped-up?
  • What is the difference between inside and outside basis?

Faculty

Kuntz, Amie
Amie Kuntz, CPA

Tax Senior Manager
Eide Bailly

Ms. Kuntz, CPA, is a Senior Manager with Eide Bailly LLP. She has 13 years of diverse experience working in both...  |  Read More

Mike Laier, CPA
Mike Laier, CPA

Manager, Pass-Through Tax Consulting Services
RSM US

Mr. Laier is a manager with RSM US LLP’s Pass-Through Consulting Services group. His professional experience...  |  Read More

Mills, Darren
Darren J. Mills, Esq., CPA, ChFC, CLU

Attorney
Mills Law Office

Mr. Mills has more than 20 years of experience advising both middle market companies and large multi-nationals...  |  Read More

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