Schedule K-1 Disclosures for Pass-Through Entities: At-Risk, Basis, and Passive Activity Schedules

Sec. 163(j), QBI, 704(c), and Tax Basis Capital Reporting Requirements

Note: CLE credit is not offered on this program

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


Conducted on Wednesday, September 30, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will discuss the latest IRS requirements for disclosing information to partners and shareholders on Schedule K-1. Our panel of tax experts will explain how to present attachments clearly and concisely for shareholders and partners of flow-through entities. They will provide examples and practical tips for tax practitioners and businesses struggling with the additional mandatory disclosures on Schedule K-1.

Description

Recent changes have significantly increased the number of footnotes, supporting schedules, and required disclosures for Schedule K-1 for partnerships and S corporations. Some of these disclosures are effective now, others for 2020 and 2021 returns. For many of these disclosures, there is a requirement with little guidance on the content of these necessary attachments.

Schedules for at-risk limitations, for example, are mentioned at least three times in the instructions provided by the IRS for Schedule K-1, Form 1065. In addition to the Box 21 checkbox, preparers must provide schedules identifying losses not subject to at-risk limitations, attachments detailing aggregation and grouping of at-risk activities, and year-by-year details of at-risk loss carryforwards.

Some of the new disclosures coincide with the release of new regulations. Bottom dollar guarantees which increased tax basis are now forbidden. Reporting negative tax basis is now mandatory. Many of these disclosures will allow the IRS to flag returns for a more in-depth look, making it imperative for tax practitioners to prepare statements that satisfy requirements and deter the IRS.

Even changes that appear to be simple often are not. Page 1 Item E, for entry of the TIN, prohibits the entry of TINs for disregarded entities. This change alone can require a significant time commitment for tax professionals who must determine if there are SMLLCs or grantor trusts as partners and then obtain the underlying tax information for the beneficial owner.

Listen as our authoritative panel explains how to meet the latest K-1 reporting requirements, including those for 199A, 163(j), 704(c), negative and tax-basis capital reporting, and other recent additions to schedule K-1.

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Outline

  1. Schedule K-1 changes: an overview
  2. Negative and tax basis capital reporting
  3. QBI
  4. 163(j)
  5. 704(c) gains and losses
  6. Passive losses
  7. Amounts at risk
  8. Disregarded entities
  9. Other required disclosures
  10. Partnership and S corporation disclosure differences

Benefits

The panel will discuss these and other critical issues:

  • How to prepare supporting basis and at-risk schedules
  • How to disclose QBI to shareholders and partners for presentation on their individual income tax returns
  • Where, when, and how is 704(c) gain and loss information disclosed?
  • What should be disclosed for aggregation and grouping elections?

Faculty

Catarino, Chris
Chris Catarino, CPA, MT

Shareholder
Drucker & Scaccetti

Mr. Catarin excels in individual and pass-through entity taxation. He focuses on all aspects of real estate investment...  |  Read More

Criscuolo, Joseph
Joseph J. Criscuolo, CPA, MT
Managing Associate
Drucker & Scaccetti

Mr. Criscuolo provides accounting, tax compliance, and business consulting services to a broad base of clients,...  |  Read More

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