Basis/Distributions for Pass-Through Entities: An IRS Hot Spot

With the advent of the electronic matching of K-1 information with items on partners’ and S Corporation shareholders’ returns, the IRS is scrutinizing the basis that owners have in these entities and the transactions in which the computation of basis is required, more closely than ever. This course addresses the rules that are used to determine basis for partnerships and S Corporations and puts the computation of basis in the contexts that often come under scrutiny – loss limitations, distributions and sales of an interest, among others. Learn the crucial rules for computing the adjusted basis and the tax treatment of distributions of pass-through entities such as partnerships and S Corporations. Focus on the computation of the basis and the at-risk amount for these entities. Become familiar with the correct allocation of liabilities among partners, the types and amounts of income that can result from distributions and sales of interests and the basis of assets distributed from passthrough entities.

• Compute the basis of a partnership interest or S Corporation stockholding
• Determine the amount and the character of income or loss the partner or shareholder should recognize because of distributions of property or money
• Apply the basis, at-risk and passive activity loss limitations to pass-through losses from partnerships, LLCs and S Corporations
• Evaluate the tax treatment of sales of either partnership interests or S Corporation stock
• Adjust the basis of partnership or LLC property following certain distributions and transfers of interests in the entity

Prerequisite:  Experience in business taxation of pass-through entities