Preparing and interpreting Form K-1 can be daunting even for experienced tax accountants. The key is knowing what the form does—and does not—convey. This self-study webinar demystifies the complexities of K-1s by providing a clear explanation of:
- Different types of K-1s (S Corps, Partnerships, LLCs, Estates and Trusts)
- The concept of "at-risk basis": how the K-1 assists you in calculating it and what information is NOT part of the calculation
- How recent tax legislation has changed the disclosure requirements on Schedule K-1
- Complicated K-1s from hedge funds
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Common disclosures and what they mean
To interpret and prepare Federal Tax Form K-1 in light of increasingly complex reporting requirements. You'll assess the effects of IRS rule changes and work through examples to clarify the concepts. You'll gain practical knowledge of the rules for disclosure and presentation and a clear understanding of "basis." And you'll learn the questions to ask a K-1 preparer to get the information you need.
- Concept of a flow-through entity
- An overview of the differences among: S corporations, partnerships, LLCs, and estates and trusts
- The Section 199A qualified business income deduction
- Explanation of "basis" and "at-risk basis" for various flow-through entities
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Review of disclosure requirements and information you might need that's NOT there
– Easily missed items
– Questions you need to ask - New Schedule K-3 requirement for international transactions
- Critical issues in preparing and interpreting a hedge fund's K-1 for investors
- Interpreting K-1 information regarding PFICs and the QEF opportunity
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K-1 and investor issues
– Losses and distribution of earnings
– Complications resulting from faulty K-1 interpretations
– How to avoid interpretation mistakes - Federal and state differences
- Hands-on examples of K-1s for S corporations, partnerships, LLCs, estates and trusts
• Understand the purpose and content of Schedule K-1
• Identify the types of entities that issue Schedule K-1
• Understand the adjustments to a partner's outside basis
• Recognize the role of the capital account in partnership reporting
• Identify the at-risk limitations on deductible losses
• Identify which debts qualify as at-risk in real estate activities
• Understand the importance of separately stated items on Schedule K-1
• Recognize examples of separately stated items
• Identify the purpose of Schedules K-2 and K-3
• Identify the exemptions for filing Schedule K-3
• Understand the consequences of exceeding basis for loss deductions
• Recognize the purpose of the Accumulated Adjustments Account
• Understand the allocation of recourse liabilities in a partnership
• Identify the tax implications of liability changes for a partner
• Understand when Schedule K-3 is necessary
• Recognize the differences between Schedule K-1 and Schedule K-2
• Identify how income is allocated to S corporation shareholders
• Understand the ordering rules for restoring shareholder basis
• Identify how income is allocated to beneficiaries of a trust or estate
• Understand the role of the income distribution deduction
• Identify when a final Schedule K-1 is required
• Understand the impact of partnership termination on Schedule K-1 reporting
• Recognize entities that issue Schedule K-1 from those that do not
• Understand how a partner’s basis is adjusted upward
• Identify items that reduce a partner’s basis
• Recognize which conditions qualify debt as at-risk
• Understand how at-risk rules limit loss deductions
• Recognize the importance of Distributable Net Income (DNI) in trust taxation
• Identify the allocation of income during partnership termination
• Understand how QBI deductions are passed through to partners and shareholders
• Identify income eligible for the Section 199A deduction
• Recognize the reporting process for additional tax items beyond Schedule K-1 limits
• Understand the tax implications of guaranteed payments
• Recognize what components impact a shareholder’s stock basis in an S corporation
• Understand the rules for restoring debt basis for S corporation shareholders
• Identify when guaranteed payments are deductible for partners
• Understand the tax treatment of income retained by a trust
• Recognize income allocation during a partner’s mid-year departure
• Understand the purpose of Schedule K-2 in reporting foreign transactions
• Understand the treatment of passive losses with insufficient basis