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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Tax Preparer

Date & Time
  • event Date

    Tuesday, June 18, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    110 minutes

Credit Information

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

$197.00
CPE
ALL

This webinar will explain meeting tax compliance obligations for partnership allocations to LLC members and partners. Our authoritative panel of real estate professionals will break down the complex rules for nonrecourse deductions, special allocations, and 704(b) compliance for tax advisers working with real estate investors.

Faculty

David A. Gilbert
Of Counsel
Blank Rome LLP

Mr. Gilbert concentrates his practice in the area of business tax law. He represents domestic and international clients in a wide range of federal, state, and local tax matters. Mr. Gilbert advises publicly traded and private corporations, partnerships, funds, tax-exempt organizations, and individuals on various matters, including those arising in taxable and tax-free mergers and acquisitions, divestitures, restructurings, spin-offs, redemptions, and liquidations; inbound and outbound investments; formation, operation, and acquisition of limited liability companies, partnerships, and Subchapter S corporations; real estate transactions; financings; and tax controversies. He also has experience advising private equity and hedge fund sponsors on the tax aspects of fund formation as well as representing institutional investors regarding joint ventures and other investments. Mr. Gilbert is admitted to practice in New York and Florida, and is also a certified public accountant in New York. He earned his LL.M. in Taxation from New York University School of Law and his J.D. from the University of Alabama School of Law. Mr. Gilbert also received his M.S. in Accounting from the University of Florida and his B.S. in Accounting and Finance from Florida State University.

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John T. Alfonsi
Managing Director
Cendrowski Corporate Advisors

Mr. Alfonsi has 25 years of tax consulting, business valuation, litigation support and forensic accounting experience. In the tax planning and consulting arena, he works primarily with partnerships and with private equity, venture capital and hedge funds.

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Description

A partnership or LLC structure provides real estate investors the flexibility they need to make unusual but necessary distributions and income allocations. The price of this flexibility includes a labyrinth of challenging calculations and considerations.

Real estate partnerships and LLCs are required under IRC Section 704(b) to make tax allocations to partners and members that have substantial economic effect. Before Section 704(b), investors sought to minimize or eliminate taxes paid by aggressively allocating losses to taxable partners and gains to tax-exempt or low-bracket partners. Operating agreements must now contain a DRO, deficit restoration obligation, or a QIO, qualified income offset. 704(b) considerations are only one of many highly complex compliance obligations tax advisers to real estate investors must consider. To meet these requirements, many real estate agreements contain targeted allocation provisions to ensure the partners' intended cash distribution goals are met while complying with existing tax provisions.

Another benefit of real estate partnerships is being able to use nonrecourse debt to increase partners' basis. This can generate additional deductions for these partners but also can trigger minimum gain, the excess of a property's nonrecourse debt balance over its book value, and the relative minimum gain chargeback. Partnership allocations for real estate entities are complex. Tax practitioners working with owners of real estate need to understand how special allocations affect the tax consequences of investors.

Listen as our panel of real estate experts explains partnership allocations for real estate entities, including QIO and DRO requirements under Section 704(b), minimum gain chargebacks, and targeted allocations unique to real estate investors.

Outline

  1. Partnership allocations for real estate entities: introduction
  2. Section 704(b), substantial economic effect
  3. Special allocations
  4. Nonrecourse deductions
  5. Minimum gain
  6. Section 469, passive loss limitations
  7. At-risk limitations
  8. Recapture of losses

Benefits

The panel will cover these and other critical issues:

  • Meeting the substantial economic effect provisions of Section 704(b)
  • Calculating minimum gain and minimum gain chargeback
  • Identifying targeted allocations in partnership agreements
  • Caveats of nonrecourse debt for real estate investors

NASBA Details

Learning Objectives

After completing this course, you will be able to:

  • Identify targeted allocation provisions in operating agreements
  • Determine how at-risk limitations affect partners' deductions
  • Decide how a partnership's allocations meet the substantial economic effect provisions under Section 704(b)
  • Ascertain the difference between recourse and nonrecourse debt

  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules; supervisory authority over other preparers/accountants. Specific knowledge and understanding of cost allocation principles; familiarity with government standards for nonprofit organizations receiving federal grant monies

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).