Correcting S Corp & Partnership Basis for ERC, Prior Year PPP Loans & Other Issues
Author: Jane Ryder
| CPE Credit: |
2 hours for CPAs
2 hours Federal Tax Related for EAs and OTRPs
2 hours Federal Tax Law for CTEC |
Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2027 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card
Two very common COVID benefits have caused serious errors with understated basis affecting many S corp shareholders and partners' basis related to how business ERC refunds and PPP loans were reported on the entity tax returns. These entity reporting errors affect the individual tax preparer's Form 1040 clients' basis. Both of these matters cause a shareholder's or partner's basis to be understated, often by substantial amounts. This course will review these critical basis miscalculations and help business tax preparers and individual tax preparers identify clients with these issues and fix these basis errors. Plus we'll discuss an analysis to correctly report ERC refunds received in 2023 and prior years.
Publication Date: June 2024
Designed For
Both individual and business tax preparers
Topics Covered
- Correcting S Corp & Partnership Basis for ERC Refunds & Prior Year PPP Loans
- ERC Refunds Cause a Basis Problem
- ERTC Refunds Taxed Twice Without Basis Adjustment
- Correcting ERC Double Taxation Basis Issue
- Form 1065, Partner Basis Worksheet Tax Year 2022
- Form 1065, Partner Basis Worksheet Tax Year 2023
- Reconstruct Prior Year Basis or Make a Current Year Adjustment?
- Only Make an ERC Basis Correction
- Circular 230 Tax Practitioner Regulations
- ERC Refunds are Not Taxable Income in the Year Received
- Other Credits Requiring Reduction in Expenses do not Create a Basis Issue
- State Basis Reporting or ERC Refunds also Needs to be Addressed
- PPP Loans Which were Ultimately Forgiven and Other Tax-Free COVID Grants
- Both Form 7203, Part I, & Partnership or S corp Basis Worksheets
- Supplemental Material: Recording ERC Refunds Received
- Accurate Reporting of ERC Refunds Received in 2022 and 2023
Learning Objectives
- Identify common basis errors related to PPP & ERC COVID benefits and how to fix this issue
- Identify which clients are likely to have these basis errors
- Identify IRS guidance related to these basis errors and steps for resolving current year basis
- Identify best practices for correcting basis errors and determining if an amended return is needed
- Identify the components of ERC refunds received and how to report them for the year received
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
None
Advance Preparation
None
