Partnership Income Taxation School

This practical workshop will use a case study approach to take the concepts of partnership taxation and apply them to the mechanics of partnership tax reporting on Form 1065. Instructed by Greg Bouchard, Senior Extension Associate, Cornell University and Carol Wright, CPA, instructor at Michigan State University Tax Schools, former IRS Revenue Agent

You’ll learn about topics such as:

Overview of Partnership Taxation

  • The complexity of applying a hybrid of flow-through and entity concepts to various partnership transactions
  • The need for tax basis capital accounts and the value of maintaining them on a market value basis
  • Differences between profits interests and capital interests and what this means for our clients

Completion of the Partnership Tax Return

  • Starting with the basics of a completed Form 1065
  • Highlighting the special reporting requirements in the year of formation
  • Reporting the transfers of partnership interests
  • Making special allocations
  • Handling recent developments – DPAD, NIIT

Basis of Partnership Interest

  • Impact of liability share
  • Impact on distributions
  • Limitation on losses

Allocations of Income – Those mandated by the Code for contributed property and optional allocations desired by the owners to meet their economic goals.

Taking Cash out of the Partnership – the ramifications of choosing guaranteed payments, draws or distributions

Sale of a Partnership Interest, the hot asset rules under I.R.C. §751 which create ordinary income. and the disguised sale rules which make the distribution of property a taxable event.

The Retiring Partner Provisions under I.R.C. §736 which provide tax planning opportunities and pitfalls for any partner who wishes to leave the partnership.

Death of a Partner – partial year allocations for Schedule K-1, potential termination of the entity.

Basis Adjustments under I.R.C. §754 which can provide substantial and current tax benefits to the continuing owners after a partnership interest is sold or passes through an estate.

Limited Liability and opportunities for managing Self-Employment Tax