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16 Cards in this Set
- Front
- Back
Partnership tax forms
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1065 - informational return
Schedule K - information on income & other allocations for partnership Schedule K-1 - information on income & allocations for individual partners |
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Guaranteed salary to partner:
Definition? Reporting for partnership? Reporting for partner? |
Guaranteed salary is a set payment 1) for work that is done 2) regardless of whether the business is profitable
Reported as income to partner Reported as an operating expense to partnership |
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Operating loss of partnership: deductible to partner?
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Yes - limited to amount of partner's at-risk balance
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Partnership: calculation of partner's at-risk balance
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+ Partner's capital balance (investment + share of profits - distributions)
+ Loans to partnership + Ownership percentage of any partnership debts |
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Contribution of property by partner to partnership: taxable gain/loss to partner?
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No - tax basis is transferred from partner to partnership
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Sale of property by partner to partnership: taxable gain/loss to partner?
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Yes if 50% or less owned by partner
If over 50% owned, gains are taxable but losses are not deductible (related party rule) |
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Partnership interest received in exchange for services rendered: partner's basis in partnership interest?
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Fair market value of services rendered
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Sale of partnership interest: calculation of gain/loss to selling partner
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+ Amount received
+ Share of partnership liabilities assumed by buying partner - Basis in partnership interest |
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Sale of partnership interest: calculation of basis in partnership interest to buying partner
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+ Purchase price
+ Share of partnership liabilities assumed |
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S Corporation: requirements
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Fewer than 100 owners
No owner can be a C Corporation |
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S Corporation: calculation of at-risk balance for owner
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+ Capital balance (investment + share of profits - distributions)
+ Loans to corporation |
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Calculation of original tax basis in partnership interest
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+ Money contributed
+ Adjusted basis of property contributed + Share of liabilities on other partners' contributions assumed by partner - Share of liabilities on partner's contribution assumed by other partners |
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Calculation of change in partnership interest
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+ Share of partnership net income (loss)
+ Share of separately stated income (loss) items + Share of increase (decrease) in partnership liabilities + Cash contributions (distributions) + Property contributions (distributions) at adjusted basis + Share of tax-exempt (non-deductible) partnership income (expenditures) |
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Partnership is terminated for tax purposes when:
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1) 50% or greater of partnership interests are sold within a 12-month period, OR
2) Partnership discontinues operations for a 12-month period, OR 3) Partnership no longer has at least two partners |
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S Corp election:
Who must consent? When effective? |
All shareholders during tax year must consent
Effective in following tax year (unless elected within first 2-1/2 months of tax year, then effective in current tax year) |
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Termination of S Corp status:
Who must consent? When effective? |
Majority of shareholders must consent
Effective in following tax year (unless terminated within first 2-1/2 months of year, then effective in current tax year) |