Partnerships Corporations

# EA Part 2 — Partnerships & Corporations (Advanced) Exam: IRS Enrolled Agent — Part 2: Businesses Exam Format: 100 multiple-choice questions | 3.5 hours | Passing score: 105 (scaled 40–130) Last Updated: June 2026 --- ## Partnership Returns — Form 1065 ### Filing Requirements Partnerships file Form 1065 (informational return — no tax paid at entity level). Due date: March 15 (calendar year); September 15 with extension. Schedule K-1: Each partner receives K-1 showing their allocable share of income, loss, deductions, credits. ### Separately Stated Items Certain items must be stated separately on K-1 to preserve their character at the partner level: - Capital gains/losses (short-term and long-term) - §1231 gains/losses - Charitable contributions - Investment interest expense - Foreign taxes paid - Tax-exempt income Non-separately stated items: Net ordinary business income or loss (combined at partnership level). --- ## Partnership Distributions ### Current Distributions (Non-Liquidating) Cash distributions: - No gain recognized unless cash exceeds partner's outside basis - If cash > basis → capital gain recognized for excess Property distributions: - No gain or loss recognized by distributing partner (generally) - Partner's basis in property = lesser of (1) partnership's inside basis in property, or (2) partner's outside basis reduced by any cash in same distribution Ordering rule: Cash first, then property (reduce basis in order). ### Liquidating Distributions Gain: Recognized only if cash received > partner's outside basis. Loss: Only recognized if partner receives exclusively cash, unrealized receivables, and inventory, AND total FMV <…