Mastering BizTax: Partnership Return Deep Dive | EPISODE 20 | Borderless Accountants

This session of the US Business Tax Preparation course by Borderless Accountants dives into the complexities of completing a 1065 Partnership Return using ProConnect software. The discussion addresses common student questions and tackles tricky issues like asset amortization, partner redemption, and maintaining accurate capital account balances. Join the community to keep improving and expanding your tax knowledge.

Chapters with Timestamps
0:00:05 Welcome and Course Introduction
0:00:45 Opening Prayer
0:01:29 Daily Quote
0:04:02 Discussion on Career Growth in Bookkeeping/Tax (No age limit, high earning potential)
0:06:15 Brief Digression on Philippine Politics and Economy (BIR, Senators, PSEI)
0:08:44 Resuming US Tax Learning: Catching up on the 1065 Return input in ProConnect
0:09:34 Student Questions on 1065 Return (Asset, Liability Allocation, Self-Employment Tax)
0:14:49 Partner Status & Self-Employment Tax: Checking partner status (passive vs. active) in ProConnect and its effect on self-employment tax
0:18:01 Intangible Asset ($2,500) Issue: Discussion on the prior year's $2,500 intangible asset, the need for a fixed asset schedule/Form 4562, and the problem of assets carrying forward without disposal in ProConnect
0:25:51 Assignment (Intangible Asset Disposal): Homework to research how to input and dispose of a depreciable asset in ProConnect
0:32:40 Partner Capital Redemption ($1,132): Addressing the redemption of a partner's share (Claudia), showing how to record it in Schedule M-2 as 'Other Decreases' and use special allocation
0:35:04 Allocating Beginning Capital & Distributions: How to ensure beginning capital and distributions match the prior year's K-1 to avoid rounding variances
0:40:36 Clearing Diagnostics & Preparer Info: Importance of clearing ProConnect diagnostics for e-filing and inputting preparer information (PTIN)
0:44:03 Clarification on Beginning Capital Balance (using 2023 ending capital)
0:45:51 Amortization Adjusting Entry: Discussing the adjusting entry needed for the $2,500 intangible asset amortization (15-year straight-line)
0:58:48 Selecting Amortization Method in ProConnect: Detailed selection process to trigger amortization for the intangible asset (using Straight Line (SL) and 15 years)
1:02:24 Claudia's Redemption Entry (Follow-up): Deep discussion on the appropriate corresponding journal entry for Claudia's capital redemption, exploring different possibilities (cash, offset, liability)
1:13:21 (Overtime) Adjusting Ordinary Business Income/Loss: Manually adjusting the allocation of ordinary business income/loss to partners after incorporating the amortization adjustment
1:24:50 Zeroing Out Claudia's Capital: Manually zeroing out Claudia's remaining capital balance using special allocation for redemption
1:36:06 Effect of Redemption on Other Partners' Capital: Final discussion on the assumption that other partners absorb the redeemed capital, leading to an increase in their capital accounts
1:38:25 Session Concludes (Further work assigned for the next day)