Partnership Losses in Excess of Basis: Preparing for the IRS' New Audit Campaign

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 Wednesday, June 15, 2022

Recorded event now available

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Course Materials

This webinar will prepare pass-through advisors to withstand IRS challenges to partners' basis calculations. Our panel of federal tax experts will guide partners and tax professionals through the calculations necessary to determine a partner's basis in a partnership, the IRS examination, and handling prior period capital account errors.

Description

In February 2022, the IRS announced its latest partnership campaign would include audits of partners' deductions of flow-through losses from partnerships. The Service believes that partners are deducting losses in excess of basis rather than suspending these losses when required. Although new, this action is not unanticipated. The IRS has heightened its ability to track partners' capital by implementing requirements to report negative tax basis capital in 2019, all partners' capital accounts beginning in 2020, and added disclosures for Section 704(c) built-in gains and losses. The IRS is using data analytics to identify partnerships that are most likely noncompliant.

Practitioners who have been scrambling to meet these added reporting requirements now must prepare to defend these positions and calculations reported. Determining a partner's outside basis, including whether tax basis capital has been appropriately captured and a partners' share of liabilities, is complicated. Recent reporting rules have led to the discovery of allocation errors.

Pass-through entity advisers need to prepare for upcoming examinations and know how to handle audits of pass-through entities.

Listen as our panel of IRS examination experts explains how to properly maintain and support partners' basis in partnerships and how to defend these calculations when representing partners.

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Outline

  1. IRS' partnership basis compliance campaign
  2. Determining outside basis
    1. Tax basis capital
    2. Liabilities
    3. Section 743(b) basis adjustments
  3. Handling past errors
    1. BBA partnerships
    2. Amended returns
    3. Unresolved differences
  4. Handling the IRS examination
  5. Best practices

Benefits

The panel will cover these and other critical issues:

  • How to maintain, calculate, and document basis by partner
  • Tips for handling an IRS audit of a partner's basis
  • How to appropriately resolve past capital account allocation errors
  • How the new BBA partnership audit rules affect basis examinations

Faculty

Horwitz, Robert
Robert Horwitz

Principal
Hochman Salkin Toscher Perez

Mr. Horwitz has over 35 years of experience as a tax attorney specializing in the representation of clients in civil...  |  Read More

Kalinski, Jonathan
Jonathan Kalinski

Principal
Hochman Salkin Toscher Perez

Mr. Kalinski specializes in both civil and criminal tax controversies as well as sensitive tax matters including...  |  Read More

Stigile, Cory
Cory Stigile

Principal
Hochman Salkin Toscher Perez

Mr. Stigile specializes in tax controversies as well as tax, business, and international tax. His representation...  |  Read More

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