Partnerships are incredibly flexible tax devices, allowing many options in determining what
appears on each partner’s K-1. IRC Sections 704(b) and (c) determine, in combination with
the partnership agreement, the numbers that appear on each partner’s Schedule K-1.
In this course we’ll take a look at the responsibilities a CPA has in calculating the proper
allocations to each partner. We’ll look at the mandatory adjustments for precontribution
built-in gains or losses of each partner, and the requirements to have partnership special
allocations respected.
This course features a live instructor and has been specifically designed for the NJCPA.
DESIGNED FOR
CPAs, accountants, and financial professionals who are responsible for advising
partnerships on tax matters or preparing Schedule K-1s.
BENEFITS
- Recognize when the mandatory rules of Section 704(c) apply to contributions of
property to a partnership
- Calculate proper allocation under each of the three safe-harbor methods of handling
Section 704(c)
- List the requirements for an allocation to have substantial economic effect under the
partnership regulations
HIGHLIGHTS
- Partnership contributions and allocations as impacted by Section 704(b)
and Section 704(c)
- How to apply the traditional method, traditional method with curative allocations,
and the residual method for contributed property
- Situations that trigger a “reverse Section 704(c)” allocations
- How to compute the partners’ Section 704(b) book capital accounts and why it matters
- Applying a qualified income offset
PREREQUISITES
Experience in partnership taxes helpful
ADVANCE PREPARATION
None