Partnerships: How to Calculate Partner Basis

Overview

A detailed analysis of the calculations related to determining a partner’s tax basis for a partnership interest. How to use the Form 1065 and Schedule K-1 information for basis determination will be reviewed. An illustrated example with filled in forms will demonstrate how the process works, including its many potential pitfalls.

Highlights

• How to calculate the basis when the entity is formed, including the impact of contributed property
• Explains the use of both "inside" and "outside" basis determination
• Clarifies the importance of partnership capital accounts and partnerships debt on partner's tax basis
• Comprehensive example to illustrate the mechanics of the basis determination process
• Explanation of how basis is impacted by distributions of partnership property and sale and/or liquidation of the partnership interest

Prerequisites

Basic working knowledge of partnership taxation.

Designed For

CPAs working in public accounting firms and/or working for partnerships.

Objectives

• Apply the latest tax provisions related to LLC members/partners basis from formation through operations and concluding with sale and/or liquidation
• Calculate tax basis capital accounts

Preparation

None