Part XIII: Partnership Taxation

Question 1

1. Is there is a control club for a corp?

2. Is there is a control club requirement for a partnership?

Answer 1

1. Yes.

2. No.

Question 2

Is there any G/L on property contributed to a partnership?

Answer 2

No.

Question 3

A partner’s basis in the partnership is increased by:

Answer 3

1. Contributions of property.
2. Proportionate share of income.
3. Proportionate share of increases in liabilities.

Question 4

A partner’s basis in the partnership is decreased by:

Answer 4

1. Distributions.

2. Proportionate share of expenses, losses, and decreases in liabilities.

Question 5

On what form does the partnership report income?

Answer 5

Form 1065.

Question 6

On what form does the partnership report the share to each partner?

Answer 6

Schedule K-1.

Question 7

$5k of organizational expenses rule for partnerships

Answer 7

1. Works the same as this rule for corps.: anything above $50k reduces the $5k that can be expensed.

Question 8

guaranteed payment

Answer 8

1. payment made to partners w/out regard to partnership income (PI).
2. Ordinary income to the recipients.
3. Reduces PI.

Question 9

liquidation of a partnership

Answer 9

1. No G/L on property received unless a partner receives cash (boot) in excess of his/her adjusted basis.

Question 10

When is a partnership considered terminated?

Answer 10

1. If no part of the bus. continues to be carried on by any partner w/in a 12 mo. period.
2. OR, if there is a sale or exchange of at least 50% in both capital and profits w/in a 12-mo. period.

Question 11

“hot assets” from a partnership

Answer 11

include inv. and unrealized rec.