Surgent's Loss Limitations - A Mechanical Review

Overview

Owners of S corporations and partnerships are subject to various limitations on pass-through losses, each with unique rules, applications, and complexities. As many businesses are reporting losses as a result of COVID-19, it is essential for tax practitioners to understand the mechanical aspects of each limitation and how they coordinate to provide effective planning for loss utilization in future periods.

Highlights

• Limitation 1: Basis limitations will be reviewed in detail with computational examples and include insights into similarities and differences between calculations for partnership interests and S corporation stock
• Limitation 2: Detailed at-risk limitation computational examples will be reviewed, and the mechanical features of partnerships and S corporation activities will be compared and contrasted
• Limitation 3: Passive loss limitation mechanics will be outlined in detail and discuss computations where there are a mix of entity structures owned by a taxpayer
• Limitation 4: Excess business losses will be presented from a mechanical perspective

Prerequisites

Basic familiarity with loss allowance rules of pass-through entities

Designed For

Experienced practitioners who desire a refresher on loss limitations and an analysis of the new rules and less experienced practitioners who desire to learn the basics of all four pass-through loss limitations and their interactions in one course

Objectives

• Understand how the activity of an entity and distributions are handled when basis limitations exist for partnership interest and S corporation stock
• Analyze at-risk amounts for disallowed losses and demonstrate understanding of how the amount and character of suspended amounts are determined
• Understand passive loss limitations and how character and the number of suspended losses are determined
• Analyze excess business loss limitations created by the Tax Cuts and Jobs Act of 2017 and understand the limitation calculation and resulting carryforward amounts

Preparation

None