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
