HMBI
SURGENT MCCOY’S HANDBOOK FOR MASTERING BASIS, DISTRIBUTIONS, AND LOSS LIMITATION ISSUES FOR S CORPORATIONS, LLCS, AND PARTNERSHIPS

The most difficult concepts to master when dealing with flow-through business entities are the basis and distribution concepts. Major error and malpractice issues occur if the CPA does not fully understand the impact of these rules. This course is designed to focus on the practical applications of these rules.

Major topics:  

  • Complete coverage of The Small Business and Work Opportunity Tax Act of 2007

  • S Corporations:
    • Determine how to calculate basis. Worksheets are included.
    • Understand the effect of stock basis and debt basis and IRS’s recent focus on ‘at-risk basis’ for shareholders
    • Recognize how AAA applies or does not apply to certain S corporations
    • Learn to apply the complex ordering rules and special elections that can have a big tax result
    • Review K-1s and understand the practical issues of how to determine basis
    • Discuss loss limitation rules in depth
    • Become aware of when you can have a taxable dividend in an S corporation
    • Understand distributions of cash and property and post-termination transition rules
    • Learn how the passive loss rules can create other problems
  • LLCs and Partnerships:
    • Understand the significant differences that can occur in calculating basis for an LLC vs. a partnership
    • Determine how to calculate basis. Worksheets are included.
    • Recognize how recourse, nonrecourse, and qualified nonrecourse debt can create significantly different tax results
    • Learn the difference between basis and “at risk basis” and what it means
    • Review §754 step-up in basis rules
    • Discuss inside vs. outside basis and optional basis adjustments
    • Learn to apply the complex rules of distribution of cash vs. property and the planning strategies
    • Find out how “hot assets” can change the game for distributions
    • Review K-1s and understand the practical issues of how to determine basis

Designed For: CPAs who prepare both individual and flow-through business entity tax returns and need a thorough grasp of these significant issues. This course is a must for practitioners to help reduce and avoid this exposure to malpractice.

Level of Knowledge: Intermediate

Field of study: Taxes