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Basis Calculations for Partnerships and LLCs

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

Note: CLE credit is not offered on this program

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

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Conducted on Tuesday, October 31, 2023

Recorded event now available

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 recourse and nonrecourse debt allocations, and the tax basis capital reporting requirements for Form 1065.

Description

Partnership basis account maintenance is a critical calculation for partners investing in LLCs and partnerships. It establishes the basis for deducting losses under Section 704(d). Unlike capital accounts showing deficits or negative balances, a partner's basis cannot drop below zero.

A partner's initial basis is generally equal to their initial investment in the partnership. The panel will discuss various ways partners establish their initial basis and how initial basis is computed.

When a valid Section 754 election is in place, a partnership may adjust the inside tax basis of assets when a partnership interest transfers. This can reconcile inside and outside basis differences in partnership interests but, once made, is mandatory and may require future step-downs.

Listen as our panel of experts explains tracking partnership basis, including annual income allocations, losses, 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?

Faculty

Alfonsi, John
John T. Alfonsi, CPA

Managing Director
Cendrowski Corporate Advisors

Mr. Alfonsi has 25 years of tax consulting, business valuation, litigation support and forensic accounting experience....  |  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

Surkin, Dean
Dean L. Surkin, JD, LLM

Professor (Adjunct)
Pace University Graduate School of Business

Mr. Surkin is an attorney engaged in private practice in the New York metropolitan area. He recently retired from the...  |  Read More

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