Partnerships

Question 1

Complete liquidation of partnership interest

Answer 1

• Allocate partners’ basis to cash and prop received.
• 1st cash reduces basis
• 2nd allocate remaining basis to inventory and unrealized receivables
• 3rd allocate remaining basis to assets received using partnership’s adj basis first, then any FMV/Basis diffs for each property, then allocate remaining basis proportionately based off the FMV of the assets.

-Gain is ONLY recognized to the extent of any money received by partner in liquidation ABOVE partners basis. If all property then no gain recog’d and allocate basis amount prop received up to partners’ basis.

Question 2

Partners distributive share of partnerships inc/loss for gifted ownership

Answer 2

• If from family and from Material Income-Producing capital,
  
  • 1st reduce income by reasonable compensation of donor
  • then remaining income distributed per % of ownership