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Basis/Distributions for Pass-Through Entities: Simplifying the Complexities

Author/Moderator: Robert Ricketts, Ph.D., CPA, Frank M. Burke, Chair in Taxation and Director, School of Accounting Texas Tech University and Larry Tunnell, Ph.D., CPA, Professor of Accounting New Mexico State University
Publisher: AICPA
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The IRS is scrutinizing, more closely than ever, the basis owners have and the transactions in which the computation of basis is required. This CPE course addresses the rules used to determine basis for partnerships and S Corporations, and puts the computation of basis in 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. This CPE course will also help you become familiar with 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 pass-through entities.

Topics Discussed

  • Structuring cash and property distributions to avoid unexpected tax consequences
  • Adjusting basis in partnership assets to save future taxes
  • Measuring the gain or loss on the sale of an interest in a partnership or S Corporation
  • Minimizing recognition of ordinary income on sale of an interest
  • Maximizing the amount of the pass-through losses deductible by the partner/shareholder

Learning Objectives
When you complete this course you will be able to:

  • 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.

Who Will Benefit:
CPA firm managers, partners and tax practitioners

Prerequisite:  Experience in business taxation of pass-through entities

Advanced Preparation:  None

NASBA Field of Study: Taxes
Level: Intermediate
Recommended CPE Credit: 8.5
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