Overview
This course explores the practical issues in the many instances in which a step-up in basis can create tax advantages for partners and members. This course includes case studies to illustrate the critical points.
Major Topics:
- Identify when an election to adjust basis will be available
- Determine when the basis adjustment must be made or may be made without an election
- Learn how to make the calculations to determine a step-up and allocate that step-up among partnership assets
- Examine practical examples dealing with a sale of a partnership interest and the effects of §734(b)
- Explore the alternatives to electing a basis adjustment
- Understand a distribution of property and when an inside basis adjustment can be considered
- Study examples dealing with sale of assets vs. sale of partnership interests and issues with hot assets
- Find out how to keep track of the “books” for tax preparers when the inside basis adjustment is made, and how to flow through adjustments through a tax return and K-1
Learning Objectives
- Distinguish the tax consequences of a partnership interest sale and of a partnership asset distribution with and without a §754 election
- Identify circumstances when a §754 election may be beneficial
- Calculate the basis adjustments to individual partnership properties when a §754 election is made
Designed for:
CPAs in public accounting who work extensively with LLC and partnership tax issues
Prerequisite:
Experience dealing with partnership and LLCs; one or more intermediate courses on partnerships and LLCs
Advanced Preparation:
None