01Technical Reference

TIERSTax Technical LogicCalculation pipelines, methods, and reporting capabilities.

Designed and built by humans, TIERS is backed by more than 25 years of experience delivering partnership tax automation at the highest level.

Tax professional using TIERS partnership tax software on dual monitors

Main Calculation Pipeline

Calculations in tiered structures of arbitrary complexity with unlimited entity and investor counts. Tested at scale.
Tax Period-driven calculations that align federal, state, and international reporting concerns.
Configurable tiering by relationship (full, tax-only, or flattened) with de minimis thresholds.
Tracking over time of partners’ Section 704(b) book and tax capital accounts, with the option to track capital by underlying investment.
Book-to-tax reconciliation of financial statement items, reclassifications, permanent and temporary adjustments, and true-ups, with tax capital rollforwards.
Target capital account allocations on net income or gross item bases, with configurable excess allocation methods, tax allocations that follow book or allocate independently, negative capital controls, and variance reporting.
Deal-by-deal allocations through tiered structures.
Tax allocations by various other methods, including tiered and non-tiered special allocations to specific investors and blocked items, with fail-safe behaviors and diagnostics.
Deterministic closure of all allocations, with designated plugging investors absorbing rounding differences.
Coordination and passthrough of allocated items in tiered structures.
Advanced capabilities to alter items at runtime as they flow up.
Provenance of all passthrough items following their chained allocations back to points of origin.
Characterization of ECI, UBTI, and FDAP items for foreign and tax-exempt investors, carried through all tiers.
Section 199A calculations, including qualified business income, W-2 wages, UBIA, REIT dividends, PTP income, SSTB identification, and business activity aggregations that follow items through tiers.
Sophisticated state allocation and apportionment calculations, with passthrough and combination of attribute values following taxable income. Configurable factor attributes, weighting formulas by jurisdiction, filing, and entity type, negotiated weighting overrides, throwback and throwout adjustments, and jurisdiction-specific precision and rounding.
Calculation of state source income with jurisdictional variations, including state modifications, single-jurisdiction adjustments, and nonbusiness income allocated to home jurisdictions.
Assignment of investors to nonresident composite filings, nonresident withholdings, PTE taxes.
Calculation of investors’ state taxes due by individual investor (or by entity-type group aggregates as required by statute), with graduated rate schedules, entity type specific rate sets, resident and foreign resident treatment, tax base exclusions, and overrides
Tracking, allocation, and reconciliation of state tax payments made by or on behalf of partners, including estimates, extensions, carryforwards, credits from lower-tier entities, and excess withholding reallocations.
K-1, K-2, K-3, partner footnotes, Form 1065, and state reporting capabilities. Document production in PDF and data-exchange formats (including Open Tax Document).

Section 704(c) Calculation Pipeline

Calculations driven by tax period and break period.
Multiple sequential transactions allowed on any given date at different asset and partner values where necessary.
Calculations in tiered structures, with runtime flowthrough rules and configurable tiering.
Tracking over time of partners’ 704(b) book interests in various tranches, adjusted Section 704(c) differences in underlying property, and book and tax capital accounts.
Full automation of internal 704(b) and 704(c) accounting relating to partners’ transfers of interest and redemptions.
Tracking of Section 704(b) book basis and tax basis of partnership property, including depreciable and amortizable property.
Layered forward and reverse Section 704(c) differences by asset, with layer-level allocation overrides and rollovers.
Depreciation calculations under MACRS and ADS (straight-line), per IRS Publication 946, with period-level tax depreciation overrides.
Section 704(b) revaluations of partnership property, including allocation of enterprise valuations to underlying assets.
Section 704(c) depreciation and gain/loss allocations under Traditional, Curative (segregated or aggregated), and Remedial methods, plus pro rata and contingent liability treatments.
Tracking and allocation of depreciation recapture under Sections 1245, 1250, and 1254, including recapture of 743(b) and 734(b) adjustments, with ordinary, capital, and Section 1231 characterization of gain and loss.
On-demand hypothetical liquidations of partnership property including Section 751 ordinary/capital characterization of gain and loss down to the investor level.
Section 752 debt analysis and allocations, including three-tier nonrecourse debt allocations (partnership minimum gain, Section 704(c) gain, and excess nonrecourse liabilities, with elective and override options) and recourse debt, allowing for re-collateralization and other changes in debt fact patterns.
Property distributions and retirements.
Section 743(b) adjustment calculations, allocation to property, and ongoing recovery, including both two-way and one-way (substituted basis) adjustments.
Section 734(b) adjustment calculations, allocation to property, and ongoing recovery.
Allocation of miscellaneous other 704(b) book and tax items to partners.
Transparent summary- and detail-level reporting of all items by tax period, break period, calculation stage, asset, Section 704(c) layer, investor, and investor interest tranche.
Direct integration of 704(c) outputs into TIERS’ core tax compliance pipeline.

Securities Aggregation 704(c) Calculation Pipeline

Calculations driven by Tax Period, Aggregation Period, and Break Period.
Calculations in tiered structures, with runtime flowthrough rules and configurable tiering.
Tracking over time of partners’ 704(b) book and tax capital accounts, with separate analyses of two types of Section 704(c) differences: Pure Disparity and Revaluation (URGLA).
Aggregate 704(c) special allocations under Partial Netting and Full Netting regimes.
Stuffing allocations following before-aggregation and after-aggregation (reallocation) regimes, with stuffing groups and current or prior period lookbacks.
Incentive fee accrual and crystallization on fixed (e.g. Aggregation Period, Tax Period) schedules and arbitrary schedules (e.g. partner redemption), allowed before or after aggregation.
Full automation of partners’ fractional transfers of interest and redemptions, including triggered stuffing and incentive fee reallocations.
Per Aggregation Period configuration options for:
- Netting method
- Pure Disparity or Revaluation Only (URGLA) allocations
- Excess gain and loss allocation method (including book income, economic capital, average economic capital, continuing, and follow-allocation bases)
- Stuffing-only netting method, require stuff gains, require stuff losses
- Stuffing lookback period
- Allow remedial allocations for stuffing shortfalls
Side pocket allocations.
Allocation of specified items based on other allocations, tracking of book accruals, and exclusion of designated items from incentive fee calculations.
Characterization of ECI, UBTI, and FDAP items for foreign and tax-exempt investors.
Allocation of miscellaneous other 704(b) book and tax items to partners.
Transparent summary- and detail-level reporting of all items by Tax Period, Aggregation Period, Break Period, Calculation Stage, Investor, Investor Account.

Depreciation Calculation Pipeline

Depreciation Period-driven calculations across multiple depreciation books.
MACRS, straight-line (including ADS), and nondepreciable property under half-year, mid-quarter, and mid-month conventions, per IRS Publication 946.
Section 179 expense and bonus depreciation, with bonus rules by property class, placed-in-service window, and recovery period.
Salvage values, dispositions, retirements, and period-level depreciation overrides.

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