Basis Calculations for Partnerships and LLCs

Book-Ups, Step-Ups, At-Risk Amounts, Allocating Liabilities, and Tax-Basis Capital Reporting

An encore presentation with live Q&A.

A 110-minute CPE webinar with interactive Q&A


Thursday, December 16, 2021 (in 10 days)

1:00pm-2:50pm EST, 10:00am-11:50am PST

or call 1-800-926-7926

This course will provide tax preparers and professionals advising partnerships and LLCs with a solid foundation for calculating and maintaining partners' basis accounts. The panel will discuss book-ups, step-ups, at-risk rules, the corresponding debt allocations of recourse and nonrecourse debt, and recently added tax basis capital reporting requirements for Form 1065.

Description

Partnership basis account maintenance is likely the most complex and 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 explained in Form 1065 instructions, most partner's capital account balances must be reported on a tax basis using the transactional approach.

Unlike reporting for other entities, contributions and distributions to partnerships are measured using an adjusted basis for tax basis. However, when a new partner buys in, 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, at-risk rules, and recent tax-basis reporting requirements.

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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. Recent tax-basis reporting requirements
  8. Basis issues in bankruptcy
  9. 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 the 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?

An encore presentation with live Q&A.

Faculty

Coppinger, Terence
Terence Coppinger

Principal
Cedar Point Accounting

Mr. Coppinger has been advising clients in the areas of tax information reporting and IRS practice and procedure for...  |  Read More

Kramer-Andrew
Andrew Kramer, CPA

Senior Manager
Yeo & Yeo CPAs & Business Consultants

Mr. Kramer has more than 14 years of client service experience, specializing in tax planning and preparation for...  |  Read More

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