Description
Owners of S corporations and partnerships are subject to numerous limitations on pass-through losses, each with unique rules, applications, and complexities. With the increase in popularity of pass-through business entities, it is essential for CPAs to understand the complexities and interactions of these pass-through loss limitations.
Highlights
- Tier 1: Basis limitations for S corporation shareholders and partners
- Tier 2: §465 at-risk limitations for S corporation shareholders and partners, including the impact of debt, indemnities, guarantees, and shareholder/partner agreements
- Tier 3: §469 passive loss limitations and exceptions to the limitations
- Tier 4: The new excess business loss limitation of the Tax Cuts and Jobs Act of 2017 (new §461(l))
Objectives
- Analyze how basis in an ownership interest in a pass-through entity is established
- Discuss how activity of the entity, distributions, and optional adjustments increase or decrease basis
- Discuss when basis is “at-risk” under §465, and the resulting loss disallowance and carryforward related to basis that is not at-risk
- Define passive activities under §469 and exceptions to the passive loss rules
- Discuss when and how aggregation of activities should be used to avoid the passive loss rules
- Analyze new §461(l) created by the Tax Cuts and Jobs Act of 2017 and understand the limitation calculation and resulting arryforward
- Analyze the hierarchy of the loss limitations with examples of the application of the four tiers of losses and how they interact
Designed For
Experienced practitioners who desire a refresher on loss limitiations and an analysis of the new rules. Inexperienced practitioners who desire to learn the basics of all four pass-through loss limitations and their interactions in one course.