Advanced Partnership Tax Planning

Categories: Federal Tax, IRS CE
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About Course

This two-hour advanced continuing education course equips tax professionals with a technically rigorous command of federal partnership tax planning issues — the rules that separate a properly structured partnership allocation from one that gets recharacterized on audit. The course is built for enrolled agents and other tax return preparers who already handle partnership returns and want to advise partnership and pass-through entity clients with confidence.

Participants examine the substantial economic effect requirements under IRC §704(b) for special allocations, the outside basis and at-risk limitations on a partner’s ability to deduct losses, the Section 704(c) allocation methods for contributed property with built-in gain or loss, the Section 754 election and the resulting Section 743(b) and Section 734(b) basis adjustments, the disguised sale rules under IRC §707, and the recourse and nonrecourse liability allocation rules under IRC §752. Throughout the course, the focus remains on federal tax law as it applies to partnerships and their partners.

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What Will You Learn?

  • Apply the substantial economic effect requirements under IRC §704(b) to a partnership special allocation
  • Apply the outside basis and at-risk limitations governing a partner's ability to deduct partnership losses
  • Apply the Section 704(c) rules for allocating built-in gain or loss on contributed property
  • Apply the Section 754 election and the resulting Section 743(b) and Section 734(b) basis adjustments
  • Distinguish a disguised sale from a genuine capital contribution under IRC §707
  • Apply the recourse and nonrecourse liability allocation rules under IRC §752

Course Content

Module 1 – Special Allocations and Substantial Economic Effect Under §704(b)
This module covers the substantial economic effect requirements under IRC §704(b) for partnership special allocations, including capital account maintenance, the deficit restoration obligation, and the qualified income offset, along with the partners' interest in the partnership standard that applies when the safe harbor is not met.

  • Special Allocations and Substantial Economic Effect Under §704(b)

Module 2 – Partnership Basis, At-Risk Rules, and Loss Limitations
This module addresses the outside basis and at-risk limitations that govern a partner's ability to currently deduct partnership losses, the correct three-tier ordering of the basis, at-risk, and passive activity loss rules, and practical basis-planning techniques including partner loans and guarantees.

Module 3 – Section 704(c) Built-In Gain and Section 754 Elections
This module covers the Section 704(c) allocation methods for property contributed with built-in gain or loss, the mechanics of a Section 754 election, and the resulting Section 743(b) and Section 734(b) basis adjustments, including when those adjustments become mandatory regardless of the election.

Module 4 – Disguised Sales and Partnership Liability Allocations
The final module covers the disguised sale rules under IRC §707 that distinguish a taxable sale from a genuine capital contribution, and the recourse and nonrecourse liability allocation rules under IRC §752 and their effect on partner basis.

Final Assessment – Advanced Partnership Tax Planning
You have completed an advanced review of federal tax planning for partnerships and their partners, covering special allocations and substantial economic effect under §704(b), partnership basis and loss limitations, Section 704(c) built-in gain and Section 754 elections, and disguised sales and partnership liability allocations. You are now prepared to demonstrate your understanding of the key concepts. The following final examination assesses your knowledge of the material covered in all four modules. A passing score of 70% is required to successfully complete the course.

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