Partnership Preparation, Basis Calculations & Distributions: Form 1065 Schedule K & K-1 Analysis
This comprehensive training is designed to get the accountant up to speed quickly with partnership and limited liability company (LLC) formation and preparation issues as well as a complete understanding of calculating a partner and LLC member’s basis. The cornerstone of this course is the in-depth line-by-line analysis of the Form 1065 Schedule K and K-1 and how these items affect the partner/member’s individual income tax return.
Each attendee will receive the most comprehensive reference manual with numerous practice aids and real-world examples and case studies. Topics include but are not limited to:
- Extensive review of the partnership tax laws with an emphasis on any new legislative changes including the Tax Cuts & Jobs Act (TCJA) new 20% qualified business income (QBI) deduction and changes to the interest deduction, fringe benefits and entertainment expenses
- Review the Form 1065 to learn how income statement items get reported on the partnership/LLC tax return (i.e. page 1 versus Schedule K) and flow-thru to the partner/members on Schedule K-1
- Analyze the Schedule K-1 line-by-line and discuss where the items get reported on the individual’s Federal income tax return and how the items affect the partner/member’s outside basis
- Look at what relevant information related to the 3.8% net investment income tax needs to be reported to the partners/members
- Formation issues including the mandatory allocation of the §704(c) pre-contribution gain or losses back to the contributing partner/member
- The purpose of tax and §704(b) book capital account
- Reporting recourse and non-recourse debt on the Schedule K-1
- Tax ramifications and reporting of cash and non-cash distributions including disproportionate distributions of “hot assets”
- Overview of the §754 election for optional basis adjustments triggering §743 (transfer of interests) and §734 (distributions)
Once participants have completed this session they should be able to:
- Form a partnership and calculate the partnership’s initial inside basis in the assets and partner’s outside basis in the entity.
- Prepare a basic partnership (Form 1065) Schedule K including the reporting of cash and non-cash distributions.
- Understand how the schedule K items get allocated to the partners/members on their individual Schedule K-1.
- List the three main reasons for calculating a partner/member’s basis in a partnership/LLC.
- Calculate a partner/member’s outside basis and determine if losses and deductions are limited on their individual income tax return.
Tax professionals that need an in-depth training course on tax preparation issues, basis calculations and distributions rules for partnerships, LLCs and their owners.