Ch. 37 - Partnerships

Question 1

General partnership vs limited partnership

Answer 1

general - a general partner is jointly and severally liable for debts of the partnership
limited - a limited partner’s exposure is limited to the investment in the partnership

Question 2

Adjustments to ACB

1. Business income / loss (added or deducted)

Answer 2

1. income is added / losses are deducted

Question 3

Adjustments to ACB

1. capital gains/losses (added or deducted)

Answer 3

1. full amount of capital gain is added and full amount of capital loss is deducted

Question 4

Adjustments to ACB

1. Business investment losses (added or deducted)

Answer 4

1. deducted

Question 5

Adjustments to ACB

1. Dividends (added or deducted)

Answer 5

1. the actual amount subject to tax (not the grossed up amount) is added. Capital dividends are also added

Question 6

Adjustments to ACB

1. Charitable donations (added or deducted)

Answer 6

1. deducted

Question 7

Adjustments to ACB

1. Political donations (added or deducted)

Answer 7

1. deducted

Question 8

Negative ACB

Answer 8

1/2 of the negative amount is included as a taxable capital gain (not for general partners)

Question 9

Criteria for a limited partner are

Answer 9

1. the liability for debts of the partnership are limited to investment in the partnership
2. the taxpayer does not participate in management of the partnership

Question 10

At-Risk Amount for Limited Partners (calculation)

Answer 10

ACB of interest
\+ current year income
- amounts owed to partnership
- other amounts intended to reduce investment risk
= at risk amount

Question 11

Transfer of property to a Partnership

1. not tax deferred
2. tax deferred

Answer 11

1. a deemed disposition at FMV

2. section 97(1) is similar to section 85