Pass-Through Entities
Course ID: LE8178003
NASBA Category: Taxes (in NY Taxation)
Level: Intermediate
Author: Kreider, Sharon
Conference Year: 2017
CPE Credits: 6
Prerequisites: Previous tax preparation experience
Advanced Preparation: None
Course Description:

This course from Sharon Kreider gives you an in-depth look at all of the tax issues surrounding pass through entities. The materials include what the tax practitioner needs to know about the formation, structure, and operational concepts of the S corporation and the limited liability company (LLC). In addition, this course includes legal and tax issues and rules related to distributions and liquidation for both entities. Pass-Through Entities is designed to provide an understanding of the benefits and traps of choosing one entity over another, and to acquire detailed knowledge on how the entities are taxed under current law. This 2017 presentation will be updated for last minute changes to corporate taxation as President Trump and Congress discuss, debate, and draft legislation aimed at corporate tax reform.

Learning Objectives:

Upon successful completion of this course, participants will be able to:

  • Recognize issues for entity choice arising from corporate tax reform proposals
  • Develop "place holder” ideas for entity formation while corporate tax reform law is finalized
  • Identify the entity differences less likely to change because of corporate tax reform proposals

S Corporations:

  • List advantages and disadvantages of an S corporation and what's best for certain types of businesses
  • Note recent developments with S corporations, the formation of an S corporation, and the mechanics of the S election
  • Review the check the box regulations and when they are best to use
  • Recognize the operational aspects and taxation of an S corporation
  • Learn compensation issues that are unique to S corporations
  • Discuss new court decisions on S corporation reasonable compensation
  • Identify fringe benefits for S corporations and their shareholders including health insurance reimbursements
  • Identify debt basis rules from IRS regulations
  • Calculate suspended loss carryovers from basis limitations
  • Recognize the purposes of the AAA account and certain taxes that may be imposed on S corporations
  • Establish basis for calculating gain or loss on sale of S corporation stock
  • Recognize limitations of Section 1244 when dealing with S corporation stock sales
  • Cite the consequences to both the S corporation and its shareholders when the S corporation is sold or liquidated
  • Plan to recognize a loss at liquidation for depressed assets of the S corporation

Limited Liability Companies (LLCs):

  • Identify the entity type decision maker and what is required to form an LLC
  • Specify which type of entity has the smallest chance of audit
  • Cite streamlined audit procedures and when then may apply
  • Recognize the size of most large partnerships
  • Specify start-up expenses deductible by LLCs
  • Recognize when partnership tax returns are due and what year-ends are electable
  • Specify when an LLC is considered an investment company
  • Cite the time period for disguised sales
  • Identify contributed property ineligible for non-recognition treatment
  • Identify how distributive shares are determined
  • Specify how retiring member's interests are liquidated
  • Recognize LLC loss limitations
  • Identify the treatment of a reduction in LLC liabilities
  • Cite the section for electing basis discrepancy alleviation, as well as items includable in basis
  • Identify at risk tests
  • Specify appropriate compensation for LLC members
  • Recognize test requirements for special allocations
  • Identify the correct reporting for LLC/member inconsistencies
  • Identify the relationship between basis and distributions and between basis and liabilities
  • Specify distributions that prevent loss recognition
  • Recognize hot assets, extraordinary items, and disguised sales
  • Select the time period for presumed sales
  • Recognize the tax treatment of investment income and acceptable reporting methods
  • Recognize the difference between liquidations and sales
  • Identify the result of unrealized receivables or inventory transactions, as well as interest surrenders
  • Specify the proper reporting of exchanges involving unrealized receivables
  • Identify proper §754 election procedures
Compliance Information:
Blank fields indicate that this course does not qualify for those categories.
NASBA Registry #: 103220
IRS Provider #: OMYXB
IRS Course #: 0MYXB-T-01116-17-I
IRS Federal Tax Law Credits: 6
IRS Federal Tax Update Credits:
IRS Ethics Credits:
California Specific Information:
CTEC Provider #: 2071
CTEC Course #: 2071-CE-1070
CTEC Federal Tax Law Credits: 6
CTEC Federal Tax Update Credits:
CTEC Ethics Credits:
CTEC State Credits:
Qualifies for CA Fraud: No