Handbook for Mastering Basis, Distributions, and Loss Limitation Issues for S Corporations, LLCs, an

• Determine initial basis and organizing tax-free under §351 and §721
• Understand what affects basis and how to treat distributions
• Pass the four loss limitation hurdles to deduct pass-through losses

• Applicable coverage of recent tax acts and any new legislation
• Discuss a Proposal for a yet to be developed new tax form, which calculates basis, designed to be attached to individual returns
• Executor’s new IRS form for disclosing basis in certain distributed property; what about the basis of a property distribution from a trust?
• How §179 limitations affect basis and how tax-benefit rule is applied
• Basis implications of personal assets converted to business use
• How to calculate basis of inherited qualified and joint tenancy property
• S Corporations: – Beware of final IRS Regulations regarding “Open Debt”; – 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 doesn’t apply to S corporations; – Learn to apply the complex basis ordering rules and special elections that can have a big tax result; – Discuss loss limitation rules in depth; – When you can have a taxable dividend in an S corporation; – Understand distributions of cash and property; – Understand the post-termination transition rules, which will be important if (when) tax changes bring the return of C corps
• LLCs and Partnerships: – Learn the detailed rules of §704 for preventing the shifting of tax consequences among partners or members; – Learn to calculate basis under §704 & for “at-risk” under §465; – Recognize how recourse, nonrecourse, and qualified nonrecourse debt can create significantly different tax results; – Learn the difference between basis and “at-risk basis”; – Review §754 step-up in basis rules; – The economic effect equivalence test or “dumb-but-lucky” rule; – Learn to apply the complex rules of distribution of cash vs. property