Avoid common errors
Partnership tax returns
Understand common errors practitioners make in preparing partnership tax returns that are often missed during the review process.
Familiarize yourself with the new K-2 and K-3 requirements for partnerships.
Sharpen your reviewer skills by examining case studies and discussing complex LLC and partnership issues often missed by staff tax return preparers.
Implement your learning using case studies to increase your comprehension and retention.
Learning Objectives
· Calculate the balance in the partners' capital accounts and enter the results on Form 1065 and on the Schedule K-1s.
· Identify the purposes of Schedules L, M-1, and M-2.
· Recognize the tax treatment, both at the partner and the partnership level, of guaranteed payments to a partner.
· Calculate the amount of the guaranteed payment when the partner is to receive the lesser of a fixed dollar amount or a fixed percentage of partnership income.
· Identify and report Section 1202 gains on Form 1065.
· Calculate the ordinary loss to the partners from the sale of Section 1244 stock.
· Determine how installment sales are taxed and disclosed by partnerships.
· Analyze the consequences when a new partner joins the partnership.
· Prepare a balance sheet following a revaluation of LLC or partnership assets.
· Make appopriate allocations of book and tax income following the entry of a new partner to a partnership during a taxable year.
· Compute book depreciation expense following the revaluation of a partnership's assets.
· Properly allocate depreciation expense among the contributing and noncontributing partners under Section 704(c).
· Apply the provisions of Section 737 and make associated adjustments to the basis of property retained by the partnership.
· Determine the tax basis of distributed property in the hands of the recipient partner.
· Calculate the required basis adjustments under Section 734(b) when a partnership distributes property to a partner in liquidation of his interest.
· Allocate the Section 734(b) adjustment, if any, among properties retained by the partnership following a distribution of property.
· Allocate nonrecourse liabilities among the partners in a partnership.
Major Topics
We will cover common errors made involving the following:
· Form 1065
· Schedules K and K-1
· Schedules M-1 and M-2
· Calculating recourse and nonrecourse liabilities
· Partner inside and outside basis
· Partner's capital account analysis
· IRC Sections 704(b), 704(c), 721, 722, 732(b), 734(b), 737, 743(b)
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