Partnership Flashcards
Partnerships are:
Not a legal taxable entity
Income flows through to partner via K-1
Property for Partnership Interest
Non taxable event
Partners Basis= Basis of prop contributed
services for Partnership Interest
taxable event
treated same as compensation
Taxable income amount becomes basis
Partnership holding period of an asset
Inherits holding period of asset contributed
except inventory: inventory holding period begins when contributed
start up costs
tax treatment same as individual
syndication fees not deductible
deductions to arrive at partnership income
COGS Wages Guaranteed Payments Business Bad Debt Interest Paid Depreciation ( except 179) Amort of start up costs = Partnership income
Partnership Loses
cannot be taken below basis
loss carried forward until basis available
Partnership benefits
Health/life insurance > treated as guaranteed payments and included in income
Partners Basis from prop cont
Cont of prop > props original basis
Comp of services> FMV of % of partnership
Purchase> Amnt of purchase = basis
Interest by gift> Gift rules apply
Items Not Deductible on Sched K
Foreign tax pd Inv Interest Exp 179 Exp Charitable Cont (IFC179)
Items not included on Sch K
Passive Inc
Portfolio Inc
1231 G/L
(PP1231)
Partnership Basis Calc
Beg Basis \+ Cap cont \+share of ord Inc \+Cap Gains \+tax-exempt Income = End Basis
Partnership Basis decreases
Money distributed
adj basis of prop distributed
share of ord loss
partnership is relieved of a liability
Partnership Increases
Partnership getting a loan
Guaranteed payments DO NOT affect basis
Distribution: Order of basis reduction
- Money Received
- Adj Basis of unrealized rec and inv
- Adj basis of other prop
(ONLY MONEY distributions trigger gain in distribution)
