PS: Allocations Under §704(c)

General Description:

The Partnership Series is taught on a basic level for new tax professionals. The partnership operating agreement will specifically refer to §704(c) and a reverse §704(c) allocation, regarding property contributed by a partner to a partnership. The participant will learn the different methods available for allocating built-in gains/built-in losses and how to advise a client as to the preferred method for allocating built-in gains and built-in losses.

Learning Objective:

After completing this course the participant will be able to:

• Identify the language in the partnership operating agreement which references §704(c) and a reverse §704(c) allocation.
• Determine when §704(c) applies.
• Define built-in gain (BIG) and built-in loss (BIL).
• Diescribe the methods available for allocating BIG/BIL: traditional method, traditional method with a curative allocation, remedial allocation method, and small disparity.
• Determine when a reverse §704(c) allocation applies.
• Explain the ceiling rules and methods available to eliminate the distortions caused by the ceiling rule.
• Determine how to allocate tax depreciation using the different methods for allocating BIG/BIL and how to allocate depreciation after a reverse §704(c) election.
• Determine how to allocate the gain or loss on the disposition of property subject to §704(c).
• Determine net unrecognized built-in gain/built-in loss on Schedule K-1, Line N.
• Determine the effect of a §754 election and when either a §704(c) or a reverse §704(c) allocation applies.

Instructors:

Mark A. Vogel is a retired professor and director of the University of Denver Graduate Tax Program, where for 38 years he taught courses in individual, fiduciary, tax accounting, partnership, and corporate taxation. He is the author of Divorce Taxation Guide (John Wiley & Sons) and Individual Taxation (Shepards/McGraw-Hill). He received a J.D. and LL.M. in Taxation from the University of Denver College of Law and an undergraduate accounting degree from the University of Notre Dame. He is also a CPA licensed in Illinois.

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