Partnerships Flashcards
What amount and character may a partner deduct when a loss is incurred by a partnership?
The amount of partnership loss which may be deducted by a partner is limited to the partner’s basis in the partnership (at the end of the taxable year of the pship).
It is characterized as an ordinary loss
For tax purposes, a retiring partner who receives retirement payments ceases to be regarded as a partner
Only after the partner’s entire interest in the partnership is liquidated
What is included in portfolio income?
Portfolio income includes all interest income, other than interest income derived in the ordinary course of a trade or business
In the computation of a partners 10% share of the partnership’s loss, the Pship had an operating loss of ($150k) and earned interest of $12k on a temporary investment. What is the partner’s passive loss for the year?
Only the 10% share of the $150k is included in the passive loss. Portfolio income is excluded from the passive loss calc, but the taxpayer will still report $1,200 of portfolio income
When is a gain or loss recognized on the transfer of property to a partnership?
Generally no gain or loss is recognized on the transfer of property to a partnership in exchange for a partnership interest
What items are considered syndication fees? Are they considered in determining organizational/start up costs?
Syndication fees include costs connected with issuing and marketing of partnership interests such as commissions, professional fees, and printing costs. These costs must be capitalized and can neither be amortized nor depreciated.
They are NOT considered in determining org/start up costs as these costs are capitalized and not amortized/depreciated
In March Y6, Lou Cole bought 100 shares of a listed stock for $10k. In May Y6, Cole sold the stock for its FMV of $16k to the partnership of Rook, Cole, & Clive. Cole owned a 1/3 interest in the pship. In Cole’s Y6 tax return, what amount should be reported as short-term capital gain as a result of this transaction?
Answer = $6k.
If a person engages in a transaction with a partnership other than as a partner of such partnership, any resulting gain is generally recognized just as if the transaction had occurred with a nonpartner.
