Gain a better understanding of Section 704(c) provisions and prevent errors and penalties.
Many investors in partnerships, LLCs, and other entities treated as partnerships and their tax advisors struggle with the concepts and the operating rules that apply to Section 704(c). These rules potentially apply whenever property is contributed to such a partnership-treated entity or is distributed from such an entity. The regulations under Section 704(c) provide a very flexible but very complicated set of rules for required allocations that apply to contributions of property and distributions of property from an entity that is treated as a partnership. This presentation is designed to help the drafters of the basic operating documents for an entity treated as a partnership, including partnership agreements, operating agreements, and trust agreements; the tax return preparers for such entities; and those who structure transactions using such entities, understand and work with the Section 704(c) regulations. Various elections are available to adopt methods of allocation under Section 704(c), as well as information on so-called "reverse allocations." Failing to have a proper understanding of these provisions can potentially result in unanticipated and adverse tax consequences for partners, members, and beneficiaries of partnership-treated entities.
Learning Objectives
- You will be able to recognize the characteristics of a Section 704(b)
- You will be able to recognize the characteristics of a Section 704(c)
- You will be able to differentiate between the various allocations
- You will be able to identify the economic test
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Agenda
Section 704(c) - General Concepts
- Forward Allocations
- Reverse Allocations and Section 704(b)
Forward Allocations
- Book Value vs. Tax Basis Issue
- Methods of Allocation
- Traditional Method
- Curative Allocations
- Remedial Method
Reverse Allocations
- Section 704(b) Issue Upon Revaluation of Capital Accounts
- Aggregation Elections
Statutory Backstopping of Section 704(c)
- Section 704(c)(1)(B)
- Section 737
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OnDemand Course
This course was last reviewed on January 31, 2024.
Call 1-866-352-9540 for further credit information.
- AK CLE 1.5
- Alaska attorneys may receive 1.5 hours of continuing legal education for completing this program. Please contact the Alaska Bar Association or go to www.alaskabar.org for details regarding reciprocity with other states.
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- Neither the Connecticut Judicial Branch nor the Commission on Minimum Continuing Legal Education approve or accredit CLE providers or activities. This course has been approved for CLE credit in jurisdictions aside from CT and therefore it automatically meets the content and delivery requirements in Connecticut. Credit is based on a 60 minute credit hour and shall be awarded as follows: 1.5 CLE credit(s).
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- VT CLE 1.5
- This self-study program has been approved by the Mandatory Continuing Legal Education Board of Vermont for 1.5 hour(s) of CLE credit. Please note: Attorneys may only claim 12 credits per compliance period in this format. This course is considered "Non-Moderated Programming without Interactivity".
CPE/NASBA - QAS Self Study 2.5 including Business Management and Organization 2.5
- Noggin Guru, Inc. dba Lorman Education Services and BankersHub is registered with the National Association of State Boards of Accountancy (NASBA) as a QAS Self Study sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: www.nasbaregistry.org. For more information regarding administrative policies such as complaint and refund, please contact our offices at 866-352-9539. CPE Credit: Maximum Credit Hours: 2.5 each session (based on a 50 minute credit hour). You must attend at least 50 minutes to obtain credit. Field of Study: Business Management and Organization for 2.5 hours. Prerequisite: . Level of Knowledge: Intermediate. Teaching Method: Seminar/Lecture. Advance Preparation: None. Delivery Method: QAS Self Study. Please refer to the information in this advertisement for outline, course content and objectives. Upon completion of this course, you will receive a certificate of attendance. Final approval of a course for CPE credit belongs with each state's regulatory board.
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Why Lorman?
Over 37 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.
Faculty
Leo N. Hitt
Reed Smith LLP
- Partner in the Pittsburgh office of Reed Smith LLP
- Member of Reed Smith’s tax practice and former head of the Tax, Benefits, and Wealth Planning Group
- Practice emphasizes all aspects of federal income taxation, with particular emphasis on the taxation of business entities, such as partnerships and corporations, securitized and other investment vehicles, including RICs, REITs, and REMICs
- Conducts seminars and workshops on numerous topics for a large number of professional groups, including lawyers, accountants, and business people
- Frequently writes for various publications on topics related to the areas of the federal income taxation of business entities and other related topics
- Member of the Pittsburgh Tax Club and Allegheny Tax Society
- Member of the Pennsylvania Supreme Court and U.S. Tax Court bars
- J.D. degree, University of Pittsburgh School of Law; LL.M. degree in taxation, New York University School of Law; B.A. degree, University of Pittsburgh
- Can be contacted at [email protected] or 412-288-3298
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