Partnership Preparation, Basis Calculations & Distributions - Form 1065 Schedule K & K-1 Analysis

Overview

This comprehensive training is designed to get the accountant up to speed quickly with partnership and limited liability company (LLC) formation and preparation issues as well as a complete understanding of calculating a partner and LLC member’s basis. The cornerstone of this course is the in-depth line-by-line analysis of the Form 1065 Schedule K and K-1 and how these items affect the partner/member’s individual income tax return.

**Please Note:  If you need credit reported to the IRS for this IRS approved program, please download the IRS CE request form on the Course Materials Tab and submit to kori.herrera@acpen.com

Objectives

• Form a partnership and calculate the partnership’s initial inside basis in the assets and partner’s outside basis in the entity
• Prepare a basic partnership (Form 1065) Schedule K including the reporting of cash and non-cash distributions
• Understand how the schedule K items get allocated to the partners/members on their individual Schedule K-1
• List the three main reasons for calculating a partner/member’s basis in a partnership/LLC
• Calculate a partner/member’s outside basis and determine if losses and deductions are limited on their individual income tax return

Highlights

• Extensive review of the partnership tax laws with an emphasis on any new legislative changes
• Review the Form 1065 to learn how income statement items get reported on the partnership/LLC tax return (i.e., page 1 versus Schedule K) and flow-thru to the partner/members on Schedule K-1
• Analyze the Schedule K-1 line-by-line and discuss where the items get reported on the individual’s Federal income tax return and how the items affect the partner/member’s outside basis
• Look at detailed Schedule K-1 information reporting to partners/members needed for the qualified business income (QBI) deduction, 3.8% net investment income tax and business interest expense limitations
• Formation issues including the mandatory allocation of the §704(c) pre-contribution gain or losses back to the contributing partner/member
• Calculating the tax and §704(b) book capital accounts
• Reporting recourse and non-recourse debt on the Schedule K-1Tax ramifications and reporting of cash and non-cash distributions including disproportionate distributions of “hot assets”
• Overview of the §754 election for optional basis adjustments triggering §743 (transfer of interests) and §734 (distributions)