M3 Partnerships: Part 2 Flashcards
Partnership tax losses. Limited to what?
Partner’s adjusted basis:
Capital account + % liabilities
Partnership tax losses. Limited to at-risk amount which wouldn’t include what type of liabilities?
Nonrecourse
Reasonable compensation paid to a partner for services rendered or use of capital without regard to the partner’s ratio of income.
Guaranteed Payments
Tax treatment of Guaranteed payments to the partner and to the partnership
Partnership tax deduction
Partner - taxable income
Most tax elections are made by who?
Partnership
Organizational Expenditures amount? and Start-Up Costs amount
5,000 / excess amortize over 15 years (180 months) up to 50,000
*PAY ATTENTION TO DATES ON THE EXAM (will most likely say “on July 1” instead of “Jan 1”)
6 Examples of Organizational/start up costs?
- legal services (drafting the agreement)
- accounting services
- partnership filings
- Training costs
- advertising
- testing
Which costs would NOT be included/deductible as organizational/start-up?
Syndication costs (raising $$ - i.e. offering materials)
Partnership net business income/loss calculation
Business income
*
*Guaranteed payments are separately stated to that partner
Nonliquidating distributions - Tax Effect
General Rule = NONTAXABLE
*reduce partner’s basis NBV
Basis of distributed property. Basis may not exceed what?
The basis of the partner’s entire partnership interest
Basis of distributed property.
- What happens when the partnership basis > NBV of assets received?
- ”” when partnership basis < NBV of assets received?
Basis > NBV Assets; NO GAIN, basis = prior basis (not the NBV of new asset)
Basis < NBV Assets; reduce basis to zero but NO GAIN
When is gain recognized? (Calculation)
*When cash is received in excess of basis (LOOT)
Cash
GAIN
Which entity type can have unlimited members and can also have foreign and corporations and/or partnerships as shareholders?
Limited Liability Company (LLC)
