New Form 1065 Requirement: Computing Tax Basis Capital Accounts (Currently Unavailable)
Author: Greg White
CPE Credit: |
1 hour for CPAs 1 hour Federal Tax Law Updates for EAs and OTRPs 1 hour Federal Tax Updates for CTEC |
Beginning in 2020 Form 1065, we’ve got a new reporting requirement. Capital accounts as shown on Form K-1 will have to be reported on a tax basis (as opposed to GAAP or §704(b)). We’ll cover the issues you need to know:
• How do you compute tax basis capital accounts for this purpose?
• What do you do if you lack sufficient information to compute the current capital account balances?
• Which partnerships will not be subject to this requirement?
Publication Date: September 2020
Designed For
Practitioners advising partnership clients.
Topics Covered
- Issue: K”1 Capital Accounts Reporting Issue
- Why Does IRS Want Tax Basis Capital Accounts?
- Risk of Not Reporting: Tax Basis Capital Accounts
- General Rule: Adjusted Basis Partnership Interest
- Computing Basis Partnership Interest
- IRS Proposal: Tax Basis Capital Accounts with a "Twist"
- Notice 2020”43 ”” Two Methods: Compute Tax Basis Capital
- "Modified Outside Basis Method"
- "Modified Previously Tax Capital Method"
- Method 2: Project Out Partnerships Basis
- Choosing a Method
- Form 1065
- Should You Include Disclaimer? On K”1?
- Escape Hatch
- Comments on Notice 2020”43
- Will You Use Tax Basis Capital Account? When Filing Partner's Return?
- Keep an Eye Peeled
Learning Objectives
- Identify partnerships subject to the new rules
- Identify how to compute partnership capital accounts
- Recognize how to navigate complex issues (Sec. 743 step ups, etc.)
- Recognize how to determine the adjusted basis in partnership interests
Level
Update
Instructional Method
Self-Study
NASBA Field of Study
Taxes (1 hour)
Program Prerequisites
Basic understanding of Form 1065.
Advance Preparation
None