Idaho Society of CPAs

Surgent's Four Tiers of Loss Limitations: A Guide to the Rules for Pass-Through Entities

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  • Location
    • Your Space
      Your Space
      Self Study - Surgent, ID 00000
  • Credits
    • 4.00
  • Credit Type(s)
    • Taxes (Technical) (4.00)
  • Prerequisites

    • Basic familiarity with loss allowance rules of pass-through entities

  • Vendor
    • Surgent
  • Level
    • Intermediate
  • Fields of Study
    • Taxes
  • Message
    • When & Where You Want

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.

Type = Download

  • Qualifies for IRS CE Credit

    • Designed For

    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.

    Objectives

    • 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

    Highlights

    • The Inflation Reduction Act of 2022
    • 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 excess business loss limitation of the Tax Cuts and Jobs Act of 2017 (new §461(l)), American Rescue Plan Act, and Inflation Reduction Act

    Advanced Prep

    None

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