Event Description

Navigating the complexities of small business partnerships requires a keen understanding of the financial dynamics at play. Small business owners often blur the lines between personal and company finances, leading to frequent distributions from these partnerships. As advisors, it’s crucial for us to comprehend the tax implications of these distributions, distinguishing which ones are safe and which might pose a problem. In our comprehensive course, we delve into partnership basis calculation, a critical yet often confusing aspect of our practice. We explore the distinctions between inside basis, outside basis, and 704(b) basis, shedding light on this intricate topic through easy-to-follow examples and practice problems. Additionally, we will discuss the different types of distributions-cash, property, and hybrid-providing clarity on scenarios where a mix of both cash and property is involved. Lastly, we will examine the tax implications of initial contributions of property to a partnership, ensuring a well-rounded understanding of partnership dynamics.

Objectives

List the key rules of the thumb to remember when dealing with distributions State the ordering rules for calculating a partner’s tax basis Describe the key differences between liquidating and non-liquidating distributions Determine any applicable tax gains and losses of cash and property distributions State the ordering rules for hybrid distributions that involve both cash and property Calculate Inside Basis, Outside Basis, and 704(b) Basis Recognize the concept of Substantial Economic Effect List the three requirements that need to be present for an allocation to be deemed to have Economic Effect Calculate the reallocation of items of gains and loss under IRC 704(b) when a qualified income offset is present Recognize the tax effects of transferring cash, property, and services to a partnership Recall the tax effects of contributing assets to a partnership that are encumbered by debt