Partnership & S Corporation: Basis & Distribution Issues
Basis is a fundamentally important issue when dealing with pass-through entities, as it impacts the equity holder’s ability to deduct losses and/or receive distributions without a negative tax impact. As well, distributions from the different types of pass-through entities are subject to differences in treatment that can have a major impact on the tax liability of the client. This course will look at the rules on calculating basis, limitations on loss deductions (including at-risk rules), and the treatment of distributions.
- Formation of a new S Corporation and contribution of assets in Section 351 tax-free transactions
- Issuance of partnership interests in exchange for property in tax-free manner under Section 721
- Treatment of issuance of a partnership interest for services
- Allocation of debt to partners in a partnership, including deemed distribution provisions
- Special partnership basis rules, including required allocations for contributed assets
- Determining required adjustments under Section 704(c) and elective adjustments under Sections 734 and 743 when a Section 754 election is in place
- Treatment of partnership and S Corporation distributions
- At-risk rules and their limits on losses
Participants will be able to:
- Understand inside and outside basis and gain/loss issues on formation
- Perform calculation of basis based on annual activities of the pass-through entities
- Understand how to structure distributions to avoid unpleasant, surprise tax liabilities
Practitioners who advise clients holding interests in pass-through entities and the pass-through entities themselves.