Partnership Taxation (CPE Course)

CPE Credit: 13 hours

Course Type: Downloaded PDF materials with online test

Price (with PDF Textbook): $87

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Course Description
This course examines tax issues relating to the formation and operation of partnerships. Participants will gain a familiarity with basic areas of partnership taxation so as to recognize a problem and have at hand some practical knowledge for its solution. This course is presented in four practical segments: (1) the formation of partnerships, (2) the basic day-to-day operations of partnerships, (3) distributions of assets to partners, and (4) the termination of partnership affairs.

Author: Danny Santucci

Course Number: TX1020

IRS Program Number: 72821-T-00020-13-S

Learning Objectives

  • Determine what constitutes a partnership for federal income tax purposes.

  • Recognize the impact of partnership agreements on partners’ shares of tax items, specify the requirements of §704(e) for family partnerships, and cite the pros and cons of partnerships to determine when the entity choice is appropriate.

  • Identify the complete or partial exclusion from partnership treatment under §761.

  • Recognize the allocation of income and deduction among partners, identify when a partnership or its partners are subject to income or estimated tax, determine what constitutes §1402 self-employment taxes, and specify instances where partnerships are viewed as separate entities.

  • Specify the types of separately stated partnership expenses noting the character of such items and their deduction limitations, and recognize the §704(d) outside basis limitation and its impact on losses.

  • Determine whether a partnership can elect to amortize certain business-related expenses, and specify the elements and requirements of the partnership tax return and the items of deduction to which individuals are entitled.

  • Identify a partnership’s year taxable under §706(a) and the allocation of items of income and deduction from the partnership to the partners.

  • Identify transactions between a partner and a partnership as being between a stranger and a partnership or as guaranteed payments.

  • Recognize the tax-free capitalization rules of §721.

  • Determine a partnership’s basis for contributed assets under §723.

  • Specify the taxation of contributed services noting strategies to avoid immediate taxation.

  • Determine the original and adjusted basis of an interest acquired by contributing property and/or money under §722.

  • Recognize a partner’s loss deduction when the limits on deductions of partnership losses apply.

  • Determine capital asset treatment on the sale or disposition of a partnership interest under §741.

  • Recognize the tax treatment of a sale or exchange of a partnership interest where the partnership possesses hot assets (unrealized receivables and inventory), and identify the impact of partnership liabilities in computing both the amount realized on a sale of a partner’s interest and the adjusted basis of the sold interest.

  • Specify optional basis adjustment provisions noting how they relate to the general rule for the inside basis after the transfer of a partnership interest, determine the tax consequences of making a gift of a partnership interest, and recognize the unique treatment of partnership interests that are abandoned or foreclosed on with or without related liabilities.

  • Determine the treatment of distributions of cash or property by a partnership to the partners.

  • Determine ways to liquidate a retiring partner’s interest.

  • Identify a withdrawing partner’s basis when there are distributions in liquidation or in nonliquidation, and specify the requirements of a §754 election noting additional adjustments required.

  • Determine the taxation of limited liability companies noting the variety of tax entity choices and their advantages and disadvantages.

  • Identify ways to use an LLC noting business-planning opportunities, and specify business ventures that should avoid LLCs.

  • Recognize the federal tax consequences of establishing an LLC.

  • Identify the dangers and tax consequences in converting to an LLC from another form of entity, and recognize the potential assessment of sales and use tax, real property taxes, and real property transfer taxes on entities on conversion to an LLC.

Level: Overview

Instructional Method: QAS Self-Study

NASBA Category: Taxes

Prerequisites: None

Advance Preparation: None

Program Registration Requirements: Click on "Purchase Course" near the top of this page to pay for and access the course. You will then be able to download the course as a PDF file, then take an on-line examination, and then download a certificate of completion if you pass the examination.

Program Refund Policy: For more information regarding administrative policies concerning complaints, refunds, and other matters, see our policies page.


AccountingTools, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have the final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website:

The NASBA sponsor identification number for Accountingtools, Inc. is 115881.

AccountingTools is an IRS Approved Continuing Education Provider. We are compliant with the requirements for continuing education providers (as described in sections 10.6 and 10.9 of the Department of Treasury’s Circular No. 230 and in other IRS guidance, forms, and instructions). Our IRS Approved Continuing Education Provider number is 72821.