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.
Experienced practitioners who desire a refresher on loss limitations 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.
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 Section 465, and the resulting loss disallowance and carryforward related to basis that is not at-risk Define passive activities under Section 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 carryforward Analyze the hierarchy of the loss limitations with examples of the application of the four tiers of losses and how they interact Use case studies to reinforce the learning objectives
Tier 1: Basis limitations for S corporation shareholders and partners Tier 2: Section 465 at-risk limitations for S corporation shareholders and partners, including the impact of debt, indemnities, guarantees, and shareholder/partner agreements Tier 3: Section 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 Section 461(l)) and a look into possible changes to the deduction in the future
Basic familiarity with loss allowance rules of pass-through entities