CFOG
CLEARING THE FOG IN ADVANCED LLC AND PARTNERSHIP STRUCTURING

The purpose of this unique workshop is to familiarize the tax advisor with the required and discretionary operating-agreement provisions from both a tax and a business perspective and to help the tax advisor understand the relationship between what is said in the operating agreement and the preparation of Form 1065 and Schedules K-1. The preparation of the LLC or partnership tax return generally involves a host of questions that either are or should be answered by the agreement of the parties. This course seeks to enable accountants to spot issues that either are or are not adequately provided for in the draft of an operating agreement so that they can advise clients on structural issues. It will also direct their attention to where and how an existing operating agreement resolves the "problem areas." Both operating entities and real estate investments will be discussed. This course is essential for any tax staff members who prepare partnership or LLC returns.

Major topics include:
  • Understanding differences under state law among general partnerships, limited partnerships, and LLCs
  • Formation: the tax-on-formation trap; the use of capital interests and profits interests to service partners under the new proposed regulations.
  • Capital accounts: why and when book and tax treatment differ on contributions of property or services to an entity, providing for them in the agreement, and alternative solutions to various problems.
  • Cash flow: who gets what, when, and the impact of taxes.
  • Liabilities: nonrecourse and recourse liabilities; indemnities; at-risk management
  • Tax and business issues of operations, including taxable income versus book income.
  • Personal liability of partners and members: understanding the unique issues and problems of balancing limited liability for debts, getting tax basis, and creditors.
  • Allocations: Flip-flop, preferring the return of capital, and reduction of investor interest and augmentation of the promoter’s interest; structuring preferred returns, guaranteed payments, and special allocations; is a qualified income offset appropriate?
  • Change of partners and members: constructive contributions and distributions; rights and duties of the old and new investors; economic and management rights.
  • Elections: providing the method by which the business may alter the tax basis a tax step up in the basis of assets in a sale, redemption, or retirement of an interest, or the basis of assets distributed; considerations in making the choices.
  • Business issues to be aware of, including who will manage, what happens if a member does not contribute a required capital contribution, disputes between members, amending the agreement, and more.

Designed for: CPAs who are responsible for helping structure an LLC or partnership, and CPAs who prepare tax returns for these entities.

Level of knowledge: Advanced

Field of study: Taxes