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8 Cards in this Set
- Front
- Back
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Formation of pship |
GR: no gain or loss recognized on a contribution of property to a pship in return for pship interest
Exceptions to nonrecognition of gain (taxable events for partner): 1. Ordinary income recognized as a percentage of FMV 2. Property subject to excess liability (taxable as boot and is gain to partner) |
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Basis |
Basis of contributing partner's interest: Cash Property (Liabilities) assumed by other partners - subtracted Services Liabilities that we take on (assumed by incoming partner)
Holding period - use old assets holding period
Pship's basis for contributed propriety (NBV or debt assumed): Pship basis in the contributed property is the contributor's basis or carryover basis (plus any gain recognized if special election is made)
Partner basis formula: Beg capital amount + % All income (ord, cap, tax free) (% All losses) (Withdrawals =nontaxable and NBV) = Ending capital account + % Recourse Liabilities = Year-end basis |
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Tax losses |
Losses limited to tax basis, at risk amount and passive loss hurdles
Carry forward of losses when basis or additional income is available |
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Guaranteed payments - compensation paid to partner for services |
Partnership tax deduction - it's like salary and interest expense to calculate ordinary income
Partner taxable income - included in Schedule K-1 as ordinary income |
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Syndication costs - raising money |
Nondeductible |
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Reporting pship income and losses (K-1)-->each partner gets one |
Partner must include on his personal income tax return his distributive share of each separate "pass-through" item
Reporting pship losses (limited to basis): Partner's loss in excess of basis will be a carryforward indefinitely |
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Nonliquidating distributions |
GR: nontaxable
Basis reduction: distribution of cash or property to partner reduces the partner's basis by the cash or adjusted basis (NBV) of the property distributed
Cash: basis cannot be negative. Make basis zero and there will be gain
Property=NBV (no gain or loss), use lower of outside or inside basis to reduce basis. Basis cannot be negative
Basis of property withdrawn may not exceed basis in pship (Stop at zero basis) |
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Liquidating distributions |
Complete withdrawal: Partner's basis for distributed property is same as adjusted basis of the partner's pship interest, reduced by any monies received Must zero-out account (basis must be zero) Cash: Gain recognized only to the extent that money received exceed's partner's basis in pship Loss recognized only if money received and if the basis of the assets received is less than the partner's adjusted basis in pship Property: No gain or loss Use outside basis to reduce basis to zero
Sale of pship interest: GR: capital gain or loss on transfer Exception- "hot assets" are ordinary income not capital gain. They are unrealized receivables, appreciated inventory, "recapture income"
Retirement or death of partner: Payment for a pship interest results in capital gain or loss |
