Tax Fundamentals of LLCs and Partnerships - Tax Staff Essentials

Overview

A beginner's guide or a refresher on the essential elements of partnership and LLC taxation.

Prerequisites

None

Objectives

• Identify the effects of investor contributions and distributions on their basis in a partnership or LLC interest.
• Identify the tax basis of assets transferred to a partnership or limited liability company (LLC) at formation.
• Recognize the tax consequences of a transfer of liabilities to a partnership or LLC in connection with property transfers at formation.
• Indicate the correct treatment of partnership income by a partner for self-employment tax purposes.
• Distinguish between current and liquidating distributions.
• Recall whether special allocations called for in a partnership agreement will be allowable under the Section 704(b) regulations and when they will not be recognized by the IRS.

Highlights

Basic tax structure of partnerships and LLCs

Check-the-box elections to be taxed as a partnership

Partnership distributions

Compensatory payments to partners

At-risk and passive activity limits

Profit and loss allocations: general rules and restrictions