10/31/2023
This course provided tax preparers and professionals advising partnerships and LLCs with a solid foundation for calculating and maintaining partners’ basis accounts, discussing book-ups, step-ups, at-risk rules, the corresponding recourse and nonrecourse debt allocations, and the tax basis capital reporting requirements for Form 1065. Panel speakers included CCA’s John T. Alfonsi along with Andrew Kramer (CPA Senior Manager Yeo & Yeo CPAs & Business Consultants) and Dean L. Surkin, JD, LLM (Adjunct Professor, Pace University Graduate School of Business).
Partnership basis account maintenance is a critical calculation for partners investing in LLCs and partnerships. It establishes the basis for deducting losses under Section 704(d). Unlike capital accounts showing deficits or negative balances, a partner’s basis cannot drop below zero. A partner’s initial basis is generally equal to their initial investment in the partnership. The panel discussed various ways partners establish their initial basis and how initial basis is computed.
When a valid Section 754 election is in place, a partnership may adjust the inside tax basis of assets when a partnership interest transfers. This can reconcile inside and outside basis differences in partnership interests but, once made, is mandatory and may require future step-downs.
The panel also explained tracking partnership basis, including annual income allocations, losses, tax-exempt items, step-ups, book-ups, at-risk rules, and recent tax-basis reporting requirements.
Click here to gain access this webinar on Strafford’s website.