Reporting Partnership Targeted Tax Allocations (Completed)

Date: Wednesday, August 16, 2017
Instructor: James R. Hamill
Begin Time:  9:00am Pacific Time
10:00am Mountain Time
11:00am Central Time
12:00pm Eastern Time
CPE Credit:  2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC
2 hours Income Tax Planning for CFP

Partnerships allow partners to reach an agreement with respect to the allocation of items of income, gain, deduction, and loss — provided the agreement has substantial economic effect. Regulations finalized in 1985, at the height of the tax shelter days, provide several “safe harbors” to the structure of allocations that comply with the economic effect test. These regulations require that the partnership liquidate based on capital accounts and have largely driven the form of most partnership agreements.

After the passive loss rules eliminated the classic tax shelter arrangement, many advisors looked for alternative structures that focused on how partners would distribute money and property, and then use the distribution arrangement to determine allocations of partnership items. These arrangements are often called “targeted” allocations as they use allocations to hit a target capital account. The agreement itself does not prescribe a particular allocation scheme, but instead forces the tax return preparer to make allocations that tie capital to the agreed-to distribution scheme.

Join nationally recognized tax practitioner, instructor and commentator James Hamill, CPA, Ph.D., for this two-hour CPE webinar that provides a practical review of how to make partnership allocations based on a targeted allocation agreement. This program makes liberal use of specific examples to illustrate the “how to” of targeted allocations.

NOTE: Unlike many other programs, this class does not focus on how to draft a targeted allocation clause. As such, it is designed for the preparer of a partnership tax return.
All professionals involved with partnership tax compliance and planning matters will benefit from this insightful seminar. The course presentation time will include opportunities for you to ask questions directly to Dr. Hamill.

As our “thank you for attending” gift, firms registered for this seminar will receive a complimentary issue of Wolters Kluwer’s Journal of Passthrough Entities in electronic format.

Who Should Attend
CPAs, EAs, tax preparers and other tax professionals with responsibility for partnership tax return compliance

Topics Covered

  • An overview of the traditional safe harbor allocation scheme
  • How targeted allocations differ from traditional safe harbor allocations
  • Why targeted allocations shift risk from the drafter of the agreement to the preparer of the return
  • Illustrations of "how to" make targeted allocations with (12) specific examples
  • Illustrations of how Section 704(c) interacts with targeted allocations
  • Illustrations of how nonrecourse deductions interact with targeted allocations
  • The use of bottom line or item allocations to make targeted allocations
  • Possible guaranteed payments or capital shifts resulting from targeted allocations
  • The need to review a targeted allocation agreement before it is signed to avoid compliance nightmares

Learning Objectives

  • Understand essential aspects partnership targeted allocations
  • Properly make partnership allocations based on a targeted allocation agreement
  • Help clients understand how targeted allocations will affect their tax returns


Instructional Method
Group: Internet-based

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
Experience with partnership tax returns

Advance Preparation

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