Accounting issues
Article Abstract:
The recent decision by the Eleventh Circuit appeals court in Weiss v Comm'r, in which a ruling had to be made on whether a person who has left a partnership can still obtain a share of partnership liabilities for tax purposes, may have been made on the basis of the wrong body of law. The court used the law relating to the liquidation of an interest in a partnership, and ruled that there was not taxable gain for the year concerned, but this appears to be mistaken when analysed against the background of the aims of Section 752. However, there are good reasons for supporting the assumption that if an ex-partner continues to guarantee nonrecourse partnership indebtedness, then the partner will defer any gain recognition which may eventually result from relief of that guarantee.
Publication Name: Journal of Partnership Taxation
Subject: Business
ISSN: 0749-4513
Year: 1993
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Accounting issues: failure to pay the piper can accelerate a requirement to pay Uncle Sam
Article Abstract:
Deficit capital accounts in a partnership can result when losses are incurred, since these are allocated to each partner's capital account. Although partners have a commitment to pay back their deficits, there are instances when a partner cannot do so. Several methods of dealing with this situation are discussed. One is the modification of partnership agreement approach, which is done through the sale or exchange technique or the redemption technique. Another is the debt cancellation approach. Choosing the right approach depends on the circumstances, the tax effects on each partner and the accounting issues involved.
Publication Name: Journal of Partnership Taxation
Subject: Business
ISSN: 0749-4513
Year: 1992
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Section 754 - anomalies galore
Article Abstract:
An analysis of specific provisions of taxation law is presented. It is shown that IRC Sections 734, 743, 754 and 755 contain basic adjustment provisions which condition partnership taxation. These rules have undergone very minimal changes since the IRC was enacted in 1954 and have been amended very slightly since 1956. The rules are so complex that tax practitioners review them only when forced by client conditions or when writing an article. Thus, these laws open much opportunity for anomalous transactions.
Publication Name: Journal of Partnership Taxation
Subject: Business
ISSN: 0749-4513
Year: 1993
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