Deck 18 Flashcards
What does liabilities relieved of do to a taxpayers amount realized?
Increases the amount realized
Hot Assets (Section 751a assets) includes
Unrealized receivable and appreciated property; any gain from hot assets is ordinary income
Initial basis for contributing partner includes:
Cash contributed, property (adjusted basis), (liabilities) - assumed by other partners, services (FMV), Liabilities assumed by incoming by incoming partner
Partnership’s basis for contributed party;
NBV or debt assumed
Partnership’s year end basis =
Capital account + partner’s share of liabilities
Tax losses are limited to what?
Tax basis
How are losses in excess of at-risk limitation treated?
Carried forward until the partner generates additional at-risk amounts
Definition of guaranteed payments
Reasonable compensation paid to a partner for services
Guaranteed payments tax treatment
Allowable tax deduction to the partnership; Taxable income to the partner
Form 1065
Return of Partnership income
Schedule K
Partner’s distributive share items
Schedule K-1
Partner’s share of income, deductions, and credits; each partner gets one
Basis for non liquidating distribution
Stop at zero; Partner’s adjusted basis - cash received from distribution - any other distributions
Three ways a partner may liquidate a partnership interest:
1) complete withdrawal; 2) sale of partnership interest; and 3) retirement or death
Basis for complete liquidation (nontaxable liquidation)
Beginning capital account + % income + % of liabilities = adjusted basis; must zero-out account
Gain or loss on transferring a partnership interest (another form of liquidation) =
Beginning capital account + % income + % liabilities = adjusted basis; adjusted basis - amount received = gain or loss
Retirement or Death of Partner (form of liquidation)
Payments for the interest in partnership assets result in capital gain or loss
What amount of gain is taxable for a current distribution?
absolutely zero
What kind of asset is an automobile for personal use? capital asset or section 1231 asset?
Capital asset
If the proper waiver is filed, medical expenses paid for the decedent by her executor within one year of her death can be deducted on the decedent’s:
final income tax return
