Corporations Flashcards
what is a partners basis in a partnership interest increased by?
additional contributions
additional interests purchased or inherited;
the partner’s share of the partnership’s income (including tax-exempt income); and
any increases in the partner’s share of partnership liabilities.
A partner’s basis in the partnership interest is decreased by:
- cash and the partnership’s adjusted basis of property received by the partner in a nonliquidating distribution;
- the adjusted basis allocable to any part of the partner’s interest sold or transferred;
- the partner’s share of the partnership’s losses; and
- any decreases in the partner’s share of partnership liabilities.
is a partners basis in a partnership increased or decreased by a nonliquidating cash distribution
decreased
how do you calc a partners initial interest in a partnership?
the amount of cash contributed plus the partners adj basis in property contributed. If the partnership assumes liability with the property, the liability is split between the partners, which will reduce the contributing partners basis by the amount that the other partners assume
when a partner’s share of liabilities increases, what happens to their partnership interest?
it also increases (viewed as a contribution)
what is the at-risk amount
At-risk rules limit the amount of loss deductions from investment activities to the amount the taxpayer had at-risk. The amount that a taxpayer had at risk is the amount of cash and basis of property contributed to an activity. Borrowed amounts are considered to be at risk to the extent that the taxpayer is personally liable for repayment. At-risk rules do not apply to partnerships, but the rules do apply to the individual partners.
what is the passive activity rule
prevent the offsetting of nonpassive income with passive losses and credits from passive activities. Passive activity rules do not apply to partnerships, but the rules do apply to the individual partners.
if a partner receives a distribution, how does that affect basis
decreases
how does a reduction in the amount of liability/debt affect a partners basis
reduces basis
how much of organizational expenses be deducted
$5,000 may be deducted, but the $5k is reducedby the amount of expenditures over $50k. Expenses not deducted must be capitalized and amortized over 180months
what are guaranteed payments
Guaranteed payments from a partnership for the services of a partner are treated as salary payments and, as a result, are made without regard to the partner’s share of the partnership’s income
how are guaranteed payments treated by the partnerhsip?
as salary expense, not partnership distributions
what must the distribution consist of for partners to recognize a loss on a liquidating distribution
can consist of only cash, inventory, and unrealized receivables
how does a nonliquidating distribution affect a partners basis?
initially reduces the partners basisq
is gain/loss generally recognized on a complete liquidation of a partners partnership interest?
Generally no gain or loss is recognized upon the complete liquidation of a partner’s partnership interest, although a loss can be recognized if the liquidating distribution consists of only cash, receivables, and inventory.
how much can an individual TP deduct as a net capital loss when calc AGI
$3k
what is an attribute of a complex trust?
it distributes corpus
What kind of company/partnership would limit personal liability, avoid double taxation, and allow both of the ppl to be active in the business?
LLC
exoneration
Before paying the debt, the surety may seek the remedy of exoneration where the surety files a suit in equity to compel the debtor to pay the creditor.
what are remedies available to the surety after he has paid the creditor?
indemnification, subrogation, and contribution
what kind of business provides owners with limited liability while avoiding federal taxation of income at the entity level
subchapter S corporation
are proceeds of a lawsuit for personal injuries included in GI?
no
what is a notice-race statute
states that priority among mortgagees claiming an interest in a specific piece of property will be determined based upon the order in which the mortgages were recorded. The party to record first will have the highest priority. Thus, the recording of the mortgage in a state having a notice-race statute is important in determining priority among parties who claim an interest in the real estate.
