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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

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Conducted on Thursday, February 22, 2024

Recorded event now available

or call 1-800-926-7926

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 for 2021 returns. There is a requirement for many of these disclosures with little guidance on the content of these necessary attachments.

The Section 199A deduction provides a valuable tax benefit for taxpayers. Aggregating non-SSTBs (specified service trade or businesses) is sometimes necessary to take advantage of the deduction. For individuals to properly make the election, pass-through entities need to disclose the required information to their partners and shareholders.

All partnerships must now disclose tax basis capital information, including current year increases and decreases. For partnerships not already using the "transactional approach," three additional methods can be used to calculate beginning tax basis capital.

Even changes that appear to be simple 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 to determine whether SMLLCs or grantor trusts are partners and then obtain the beneficial owner's underlying tax information.

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.

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

Gallegos, Mark
Mark Gallegos, CPA, MST
Partner
Porte Brown

Mr. Gallegos, CPA, MST, is a tax partner on Porte Brown’s accounting and consulting services team in...  |  Read More

Lovett, Brian
Brian T. Lovett, CPA, JD
Partner
Withum Smith+Brown

Mr. Lovett has extensive experience serving the tax needs of both public companies and closely-held businesses,...  |  Read More

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