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  • videocam On-Demand
  • signal_cellular_alt Intermediate
  • card_travel Tax Preparer
  • schedule 110 minutes

Capital Accounts: 704(b) vs. GAAP vs. Tax Basis, Comparing and Contrasting Annual Allocations

Meeting Tax-Basis Capital Reporting Requirements

$197.00

This course is $0 with these passes:

CPE
ALL
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Description

Properly maintaining partners' capital accounts may be the most critical aspect of partnership taxation. Tax advisers must make accurate distributions, both liquidating and annual, reporting the entity's and taxing partners' financial positions properly. Understanding the differences in each reporting method is a must for tax practitioners working with partnerships and LLCs. Generally speaking, all three methods are necessary for partnership accounting.

Section 704(b) accounts reflect a partner's economic interest in the entity, GAAP balances report balances that comply with accounting board requirements, and tax basis balances reflect a partner's capital balance under federal income tax principles.

Reporting differences between these methods can include the value of the contributed property, depreciation methods, allocations of income, losses, debt, Section 754 elections, and more. Although the IRS attempted to define tax capital connected with new reporting requirements, no definition exists in the Code or regulations. To add to the confusion, the IRS requires that partnerships disclose partners' tax capital account balances on the partners' Schedule K-1.

Listen as our panel of partnership taxation veterans explains respecting partners' allocations under 704(b), the significance of negative capital, maintaining balances under GAAP and IFRS, and determining tax capital balances to comply with recent reporting obligations.

Presented By

John Alfonsi
Partner
Prosperity Partners LLC

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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Andrew Kramer
Baker Tilly

Mr. Kramer has more than 14 years of client service experience, specializing in tax planning and preparation for partnerships across all industries. His primary expertise lies in advising clients on partnership formation transactions, complex allocations of profit and loss, assisting clients in complying with evolving reporting requirements, allocations of partnership liabilities, and partner exit strategies.  He also advises clients on the qualified business income deduction under Section 199A and has past experience with publicly-traded partnerships, real estate investment trust operating partnerships, and renewable energy tax credits.

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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).

Date + Time

  • event

    Tuesday, October 1, 2024

  • schedule

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

  1. Partnership capital accounts: an overview
  2. GAAP
    1. Relative authority
    2. IFRS and similar methods
    3. Maintenance
  3. 704(b)
    1. Respecting partners' agreed-upon allocations
    2. Revaluations and restatements
    3. Maintenance
  4. Tax
    1. Defining the undefined
    2. Subchapter K and 704(b)
    3. Maintenance
  5. Reporting issues
    1. Negative tax capital
    2. Tax basis capital
    3. Handling differences in capital account basis

The panel will review these and other vital issues:

  • Respecting partnership allocations and 704(b)
  • Reconciling other methods to tax basis capital
  • Revaluations and restatement of capital accounts under 704(b)
  • Schedule K principles and their application to 704(b) and tax capital account reporting
  • Implications of negative tax capital accounts
  • Determining tax basis capital to meet recent requirements

Learning Objectives

After completing this course, you will be able to:

  • Differentiate GAAP, IRC 704(b), and tax basis capital accounts
  • Verify annual allocations are made and reported
  • Ascertain capital accounts are correctly maintained
  • Recognize various methods of complying with tax basis capital requirements
  • Determine that a partner's interest in a partnership is accurately reflected
  • 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 preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations; familiarity with net operating loss carry-backs, carry-forwards and carried interests.

BARBRI 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

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

BARBRI CE webinars-powered by Strafford-are backed by our 100% unconditional money-back guarantee: If you are not satisfied with any of our products, simply let us know and get a full refund. Contact us at 1-800-926-7926 .