DESCRIPTION
This module examines the at-risk basis rules applicable to partnerships and S corporations, including how to compute at-risk basis and determine allowable losses. Participants will analyze shareholder and partner debt to assess whether they create outside basis and/or at-risk basis. Through research exercises and client scenarios, participants will calculate at-risk basis, determine the treatment of suspended losses, and evaluate the impact of ownership dispositions. The module concludes with a comprehensive client case requiring participants to review supporting documentation and verify the accuracy of a basis roll forward and related loss calculations.
LEARNING OBJECTIVES
- Differentiate between outside basis and at-risk basis for partnership and S corporation interests.
- Compute a shareholder’s and partner’s at-risk basis.
- Analyze various S corporation shareholder debt scenarios to determine whether the arrangement creates outside basis, at-risk basis, or both.
- Determine the amount of loss deductible under the at-risk rules, including the identification and treatment of suspended losses.
- Verify the accuracy of a basis roll forward by reviewing client-provided documents and identifying computational or technical errors.
