REG 4 Flashcards
what’s outside basis/inside basis for partnership?
Outside basis-the basis a partner has in their ownership interest in the partnership. This partnership interest has a tax basis similar to ownership interests in other property.
Inside-t he basis that the partnership itself has in the assets it owns.
When is gain recognized upon partnership liquidation?
complete withdraw- excess money over basis
sale out-excess over basis is capital gain, or ordinary income if hot asset
retire/death- payment for interest in partnership asset is capital gain, other payment is ordinary income
When is gain recognized upon formation of partnership?
Services rendered– ordinary income
Property contributed subject to excess liability– decrease in the partner’s individual liability exceeds his partnership basis
When is gain recognized upon non-liquidating distribution from partnership?
Gain is recognized only to the extent that cash (including partnership liability assumed by another partner) distributed exceeds the adjusted basis of the partner’s interest in the partnership
A partnership is terminated when?
> =50% of the total partnership interest in both capital and profits is sold or exchanged within any 12-month period.
or, less than 2 partners left
or, Operation ceased
How is intangible assets amortized?
15 years (180 month) sarting wirh the month of acquisition
Business startup and organizational expense deductable?
Immediate deduction 5000+5000, rest is amortized over 180 month.
Payment to partners by partnership taxability?
Guaranteed- taxable like salary
Not guaranteed- treat like distribution (e.g. % of profits)
How do recourse and nonrecourse debt affect basis and at-risk amount for s corp and partnership?
nonrecourse debt adds basis but not at-risk amount.
recourse debt adds basis and at-risk amount.
same for both S and P.
When is loss recognized upon liquidating distribution of partnership?
if only money, unrealized receivables, or inventory are
received and if the basis of the assets received is less than the partner’s adjusted basis in
the partnership.
Partnership tax year requirements?
Generally calender year-12/31 end. May use 9/30,10/31,11/30 ( defferal max 3 months)
Is partner’s share of partnership loss deductible agianst other income?
YES. But losses must clear three hurdles (1) tax basis; (2) at-risk amount; and (3) passive activity. Unused can be carried forward when basis/at-risk/passive income become available.
When contribute property, partner’s holding period for his partnership interest start with?
capital or 1231 asset -carryover holding period.
ordinary income property-the date of contribution
Does guaranteed payment increase or decrease a partner’s basis in the partnership?
NO. It’s ordinary income to partner.
What’s partnership’s basis of contributed property?
The greater of carryover NBV or Debt assumed.
