Death of a Partner or Shareholder: Reporting for Tax & Heirs 

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The death of a partner, shareholder, or LLC member triggers a complex set of tax consequences for both the entity and the heirs—often creating compliance risk if not handled correctly. This course provides tax professionals with a clear, practical framework for navigating the reporting, basis, and election issues that arise when ownership interests in pass-through entities transfer due to death.

Participants will compare the distinct tax treatment differences between S corporations and partnerships (including LLCs taxed as partnerships), with an emphasis on basis adjustments, capital accounts, retained earnings, and asset-level implications. The course also examines post-death reporting requirements, key elections such as the Section 754 election, and required forms including Form 7203. Throughout the session, attendees will gain insight into practitioner exposure areas and best practices for advising fiduciaries, estates, and heirs while minimizing compliance and liability risks.

Who Should Attend
This course is designed for CPAs, enrolled agents, and tax practitioners who prepare or review business and individual returns involving pass-through entities.

Topics Covered

• Overview of pass-through entity ownership upon death
• S corporation shareholder succession rules
• Partnership and LLC member interests transferred by death
• Basis adjustments and capital account reporting
• Inheriting interests in pass-through entities
• Retained earnings and treatment of large entity assets
• Section 754 election considerations
• Form 7203 and related reporting requirements
• Risk management and practitioner exposure

Learning Objectives

• Identify key tax compliance issues triggered by the death of a partner, shareholder, or LLC member
• Differentiate tax consequences for heirs of S corporation shareholders versus partnership or LLC interests
• Apply basis and capital account reporting rules following the death of an entity owner
• Determine proper tax treatment of retained earnings and entity-held assets after an owner’s death
• Evaluate when post-death tax elections, including the Section 754 election, may be beneficial
• Assess practitioner exposure and risk areas related to reporting ownership transfers upon death

Level
Basic

Instructional Method
Group: Internet-based

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None