Four Tiers of Loss Limitations—A Guide to the Rules for Pass-Through Entities

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.

Required Knowledge: Basic familiarity with loss allowance rules of pass-through entities

Advanced Preparation: None

Who Should Attend: * 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

Objective

* 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 §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

Credit Types

Taxes: 4