Form 1041 Reporting for Partnership Income and Sales
Author: Klaralee R. Charlton
| 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 12/31/2026 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
Estates and trusts frequently own interests in partnerships and other flow through entities such as S corporations. Reporting receipts from these entities for fiduciary accounting purposes frequently creates mismatches on the fiduciary income tax return. Further complications can arise on the sale of partnership interests—particularly when those interests have received a basis adjustment at the death of the original owner. In this course, we will evaluate both the fiduciary accounting and fiduciary income tax complexities associated with owning partnership interests as well as the nuances of selling these interests and flowing income through to beneficiaries.
Publication Date: May 2024
Topics Covered
- Overview of Partnership Ownership
- Managing Deceased Partners' Interests
- Transferring an Interest After Death
- Reporting Partnership Income Post-Death
- Fiduciary Accounting of Partnership Receipts
- Distribution or Retention of Partnership Income
- Estate Tax and Cost Basis Considerations
- Post Death Sales of Partnership Interests vs. Sale of Assets
Learning Objectives
- Recognize how to categorize receipts from partnerships on the annual fiduciary accounting in comparison to the reporting of items of income on the fiduciary income tax return
- Identify beneficial timing for transactions to ensure phantom income is not needlessly trapped at the trust or estate level
- Identify how to adjust the cost basis of a partnership interest or its assets at the death of the interest owner
- Recognize ideal timing strategies for transactions in order to minimize income tax to both the entity and the beneficiary
- Identify the IRC that prescribes that the partnership’s taxable year closes at time of partners’ death but only for the partner who has passed away
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
None
Advance Preparation
None
