Basis plays a critical role in the timing and the amount of gain or loss that a partnership or its partners recognize in a variety of transactions. This session will provide an overview of the concepts and differences among inside basis, outside basis, and capital accounts. We will also highlight the effects on basis resulting from certain events, including contributions, distributions, and transfers of partnership interests. This session will also cover optional (or possibly required) adjustments to basis resulting from a Section 754 election as well as the new tax capital reporting requirements for partnerships.
Distinguish between the components of inside basis, outside basis, and capital accounts and the purpose of each.
Identify events and transactions that require a partner to determine its outside basis.
Determine potential traps for the unwary with respect to basis adjustments arising due to a Section 754 election and the new tax capital reporting requirements.