How to Make §704(b) Allocations When There Are Preferred Returns
Total Credits: 1.0 including 1.0 CPE
- Average Rating:
- 1
- Categories:
- Tax Planning | Flow-Through Taxation
- Faculty:
- Charles R. Levun | Michael J. Cohen | Scott K. Miller
- Course Levels:
- Intermediate
- Duration:
- 50 Minutes
- Format:
- Audio and Video
- License:
- Access for 1 year(s) after purchase.
Description
Learning Objectives
After completing this course, you will be able to:
• Determine when a valuation of assets is required or is discretionary for §704(b) purposes.
• Identify some of the disadvantages of operating a business in a single-member LLC format.
• Identify when there is a potential capital shift.
• Recognize the controversy as to the whether a gross income allocation is required when there may be a capital shift.
Program Description
This program delves into the controversial issue as to whether a gross income allocation is required to be made when (1) there is a partner (“preferred partner”) who is entitled to a preferred return on capital, (2) there is §704(b) capital of other partners that is subordinate to the preferred partner entitled to the preferred return, and (3) the partnership breaks even for the year.
Program level: Intermediate
Advance preparation needed: To get the most from this program, it is recommended that a participant have at least (i) two years of concentrated experience in flow-through taxation, or (ii) five years of general tax experience with a basic understanding of flow-through principles.
Delivery method: QAS (Quality Assurance Service) Self-Study
Recommended field of study: Taxes
Length of access: This course must be completed within one year of the purchase date.
Revision date: January 27, 2025; Reviewed by Michael J. Cohen
CPE Credits: 1.0 credit hour
CLE Credit
Each state has its own Continuing Legal Education (CLE) credit requirements. Tax Forum has not applied for CLE credit in any state for its Self-Study programs. No assurance can be provided that any Self-Study program will qualify for CLE credit in a state. If you require CLE credit, we suggest you contact the applicable state bar association (or other governing body) on how you may request CLE credit for attending one of Tax Forum’s Self-Study programs.
Tax Forum Policy
Refund policy: There are no refunds or cancelations.
Complaint resolution policy: Complaints are resolved by calling 800-286-4760 or emailing support@taxforums.com.
Handouts
| How to Make §704(b) Allocations When There are Preferred Returns (736.5 KB) | 15 Pages | Available after Purchase |
Faculty
Charles R. Levun Related Seminars and Products
Tax Forum
Charles R. Levun, JD, CPA, is a partner in the Chicago-area law firm of Levun, Goodman & Cohen, LLP. He is also the consultant to the Wolters Kluwer, CCH, Partnership Tax Planning and Practice Guide, for which he was the co-author of the monthly “Partner’s Perspective” column for its entire term of publication (1987-2020), and was an Adjunct Professor of Law at the Illinois Institute of Technology Chicago-Kent Graduate Tax Program (1985-2019 program termination) and Editor-in-Chief of the Journal of Passthrough Entities for its entire term of publication (1998-2019).
Mr. Levun received a JD from the University of Chicago Law School and a BS in Accounting from the University of Illinois. He is a past chair of the Partnerships and LLCs Committee of the American Bar Association’s Section of Taxation, the Chicago Bar Association’s Federal Taxation Committee and the Federal Taxation Section Council of the Illinois State Bar Association, and is a Fellow and past Regent in the American College of Tax Counsel. Mr. Levun has been chair of the faculty and co-sponsor of the Tax Planning Forum and the "Fundamentals of Flow-Through" Tax Seminar since their inception.
Michael J. Cohen Related Seminars and Products
Tax Forum
Michael J. Cohen, JD, LLM, MBA, CPA, is a partner in the Chicago-area law firm of Levun, Goodman & Cohen, LLP. Mr. Cohen received a JD and an LLM in Taxation from the Illinois Institute of Technology Chicago-Kent College of Law. He holds an MBA in Finance from DePaul University and a BS in Economics from the University of Pennsylvania, Wharton School of Finance and Commerce.
Mr. Cohen was the Associate Editor-in-Chief of the Journal of Passthrough Entities for its entire term of publication (1998-2019) and was the co-author of the monthly "Partner's Perspective" column for its entire term of publication (1987 - 2020) that accompanied the Wolters Kluwer, CCH, Partnership Tax Planning and Practice Guide. He has been co-chair of the faculty and co-sponsor of the Tax Planning Forum and the "Fundamentals of Flow-Through" Tax Seminar since their inception.
Scott K. Miller Related Seminars and Products
Tax Forum
Scott K. Miller, JD, LLM, is of counsel to the Chicago-area law firm of Levun, Goodman & Cohen, LLP. Mr. Miller received a BSBA from the University of Nebraska-Lincoln in 2000 and his JD and LLM in taxation from the University of Denver, Sturm College of Law in 2004. Prior to joining LGC in 2024, Mr. Miller worked for a national CPA and consulting firm primarily in the areas of federal income taxation with an emphasis on flow-through tax planning, M&A and business consulting. His practice included tax minimization strategies for all entity types, business reorganizations for partnerships, S corporations and C corporations, and estate and succession planning.
Additional Info
Learning ObjectiveAfter completing this course, you will be able to:
• Determine when a valuation of assets is required or is discretionary for §704(b) purposes.
• Identify some of the disadvantages of operating a business in a single-member LLC format.
• Identify when there is a potential capital shift.
• Recognize the controversy as to the whether a gross income allocation is required when there may be a capital shift.
Getting Started
Handout: Please download the searchable PDF by clicking "Handouts" in the top navigation above. This will be helpful for the final exam. A GLOSSARY is included to provide insights into any new terms.
Notes: The navigation tab just to the left of the Handouts tab, provides a handy notes area for jotting down key ideas for the final test or for your future review and insights. You can also email them to yourself with the "email button." Don't forget to save them before you leave that screen.
Quizzes: Review questions will pop up periodically throughout the program. You must take these quizzes to advance the program. They do not count towards the final test. If you get the incorrect answer, you will receive a hint. You can then select a different response to learn the correct answer.
Final Test: You have three attempts to pass. You will need to get a 70% score to pass. There is no partial credit.
Certificate: Once you pass the test, this will be accessible on your account page.
Quick Search: Both the downloadable course PDF and the course transcript are readily searchable.
- The downloadable materials can be accessed via the blue "handouts" link on the "My List" section of your Customer Profile Page (to the right of the program "launch viewer" button) as well as from the top navigation panel when viewing the program. The materials can be searched either by using the hyperlinked table of contents or by using the search bar on the very top right of the downloaded PDF file. To use the search feature, simply enter the term you want to search for into that bar and all instances of that term will be highlighted in the PDF, as well as listed on the far left panel.
- The transcript, which can be found on the far right side of the top navigation panel when you are viewing the program, has a quick search bar at the top. Simply enter the term you want to search for and all instances of that term will be highlighted in the transcript.
Help and Support: On the top right of the navigation panel, you will see HELP navigation. This will connect you to CE21's (the platform's) support. To connect to Tax Forums, please send email to support@taxforums.com. Alternatively, you can visit your account-level page and click Contact Us to access the contact form on the Tax Forums website.
Quick Search
Both the downloadable course PDF and the course transcript are readily searchable.
- The downloadable materials can be accessed via the blue "handouts" link on the "My List" section of your Customer Profile Page (to the right of the program "launch viewer" button) as well as from the top navigation panel when viewing the program. The materials can be searched either by using the hyperlinked table of contents or by using the search bar on the very top right of the downloaded PDF file. To use the search feature, simply enter the term you want to search for into that bar and all instances of that term will be highlighted in the PDF, as well as listed on the far left panel.
- The transcript, which can be found on the far right side of the top navigation panel when you are viewing the program, has a quick search bar at the top. Simply enter the term you want to search for and all instances of that term will be highlighted in the transcript.