tailieunhanh - Lecture Taxation of individuals and business entities 2015 (6/e) - Chapter 21: Dispositions of partnership interests and partnership distributions

In this chapter, the learning objectives are: Determine the tax consequences to the buyer and seller of the disposition of a partnership interest, including the amount and character of gain or loss recognized; list the reasons for distributions, and compare operating and liquidating distributions; determine the tax consequences of proportionate operating distributions; | Chapter 21 Dispositions of Partnership Interests and Partnership Distributions Learning Objectives Determine the tax consequences to the buyer and seller of the disposition of a partnership interest, including the amount and character of gain or loss recognized List the reasons for distributions, and compare operating and liquidating distributions Determine the tax consequences of proportionate operating distributions Determine the tax consequences of proportionate liquidating distributions Explain the significance of disproportionate distributions Explain the rationale for special basis adjustments, determine when they are necessary, and calculate the special basis adjustment for dispositions and distributions Basics of Sales of Partnership Interests Raises unique issues because of the flow-through nature of the entity If tax rules follow an entity approach, the interest is considered a separate asset and sale of partnership interest would be very similar to the sale of corporate . | Chapter 21 Dispositions of Partnership Interests and Partnership Distributions Learning Objectives Determine the tax consequences to the buyer and seller of the disposition of a partnership interest, including the amount and character of gain or loss recognized List the reasons for distributions, and compare operating and liquidating distributions Determine the tax consequences of proportionate operating distributions Determine the tax consequences of proportionate liquidating distributions Explain the significance of disproportionate distributions Explain the rationale for special basis adjustments, determine when they are necessary, and calculate the special basis adjustment for dispositions and distributions Basics of Sales of Partnership Interests Raises unique issues because of the flow-through nature of the entity If tax rules follow an entity approach, the interest is considered a separate asset and sale of partnership interest would be very similar to the sale of corporate stock If tax rules use the aggregate approach, the disposition represents a sale of the partner’s share of each of the partnership’s assets Basics of Sales of Partnership Interests Seller Issues Primary tax concern is calculating the amount and character of gain or loss on the sale Selling partner determines gain or loss as the difference between the amount realized and his/her outside basis in partnership Hot Assets Buyer and Partnership Issues Varying Interest Rule Operating Distributions Are usually paid to distribute the business profits to the partners but can also reduce a partner’s ownership Operating Distributions of Money Only Operating Distributions That Include Property Other Than Money Carryover basis Order in which to allocate outside basis to the bases of distributed assets Operating Distributions First, the partner allocates the outside basis to any money received and then to other property as a carryover basis Remainder is the partner’s outside basis after the