R5-M4 Partnerships 3

Question 1

How to calculate partner’s basis in the property distributed and partner’s basis when distributing multiple assets with outside basis LESS than inside basis?

Answer 1

1st - assign a basis to all assets
2nd - adjust the basis of any assets in the last property category that have depreciated in value down to FMV.
3rd - allocate any basis in the partnership interest remaining after step 2 among all the assets in the last property category based on relative ADJUSTED BASIS of the assets after 2nd step

Question 2

How to calculate partner’s basis in the property distributed and partner’s basis when distributing multiple assets with outside basis GREATER than inside basis?

Answer 2

1st - assign a basis to all assets equal
2nd - adjust the basis of any assets in the last property category that have appreciated in value up to FMV.
3rd - allocate any basis in the partnership interest remaining after step 2 among all the assets in the last property category based on FMV of the assets after 2nd step

Question 3

what are hot assets (section 751 (a) and tax treatment when withdraw, sale, or retire partnership interest?

Answer 3

• hot assets are unrealized receivables or substantially appreciated inventory
• gain or loss is ordinary

Question 4

what is realized amount by a partner on a sale of a partnership interest?

Answer 4

cash received + relief from share of partnership liabilities