Mod 37: Partnership Taxation Key Terms Flashcards
Date of Basis of inventory sold by a partnership, when the inventory was contributed by the partner.
Basis goes from date contributed to partnership
What depended on the character of the property transferred is…
When your basis begins
Offering materials
Materials to sell partnership interest
4797
Recapture from sec. 1231 assets
3 items not deductible on form 1065 (partnership returns)
1 foreign income taxes paid
2 investment interest exp.
3 179 expenses
Partnership returns are considered…
Info returns
Guaranteed payments are considered…
Distributions of ordinary income
Investment interest on schedule K goes to…
Schedule A
Net earnings from self employment calculation
Net earnings from self-employment =
Guaranteed payments +/- ordinary income
Schedule K-1 percentage does not apply to…
Guaranteed payments to partners
Contributions to charities are…
Not used to arrive at ordinary income
Partner can only deduct share of ordinary loss up to their partnership basis, it is only deductible on your form…
1040
Unused partner losses are…
Carried forward indefinitely
5 item calculation to arrive at partner’s total basis
Partner's beginning basis \+ share of all income items \+ contributions of property - withdrawals of assets \+ % of debts partner is personally liable for = total basis
At risk basis:
This basis includes…
Share of liabilities you are personally liable for
Guaranteed payments are included on schedule K-1 to be taxed as…
Ordinary income to partners
When calculating tax basis, guaranteed payments are…
Never used to arrive at basis
A small partnership with average annual gross receipts of…2
1 $1 million or less over 3 year period
2 can use cash basis
When a partner sells his interest, the selling price is known as…
Amount realized
Amount realized calculation (for partner selling his interest)
Amount realized =
cash) + (assumption of old liabilities by new partner
If the partner loses track of basis, the government allows you to calculate an alternative basis. What is the calculation?
Basis = capital account + share of liabilities
Sale of a partnership interest is a sale of…
A capital asset
751 gain is…
2) a 751 gain is treated as…
Percentage gain in non capital assets partner is selling
2) ordinary income
Adjusted basis per books
Value of assets on cash basis
Market value
Value if company is on accrual basis
To calculate ordinary income of a company, you use…
Whatever basis the company is on
Unrealized receivables are part of…
Sec. 751 ordinary income recapture
Income in excess of a sec. 751 ordinary income recapture is…
Treated as a capital gain
When the is a non liquidating distribution…
No loss is recognized
When there is a liquidating distribution, there is a loss when only the following 3 items exist…
1 cash
2 inventory
3 unrealized receivables
When there is a liquidating distribution, there is a loss when only cash, inventory or unrealized receivables are distributed for…
Less than your basis
When there is a liquidating distribution, and cash, inventory and unrealized receivables are distributed with land or other property…
The distribution is tainted
Taint
Causes loss not to be recognized
Current, definition
Non liquidating distribution
In both liquidating and non liquidating distributions, you have a gain if…
Cash exceeds basis of partnership interest
For tax purposes, a retiring partner who receives retirement payments ceases to be regarded as a partner…
Only after partner’s entire interest in partnership is liquidated
An electing large partnership (over 100 partners):
2 deductions
1 sec. 179 exp. deducted as ordinary income
2 charitable contributions limited to 10% limit
