New basis rules for partnership property distributions
Article Abstract:
The Taxpayer Relief Act of 1997 revised the procedure for allocating a partner's outside basis in assets received in partnership distributions. The new rules cover both the nonliquidating and liquidating distributions either at termination of a partner's interest in the partnership or termination of the whole partnership. Section 731(a)(1) stipulates that neither the partner nor the partnership realizes gain on the receipt of property except cash in a nonliquidating distribution. Any gain recognized on such transactions is deferred until the partner disposes of the property. Different rules apply, however, when a partner receives property other than cash in a liquidating distribution. Section 732(b) states that the partner's basis in the property or properties received should be the outside basis in the partnership interest regardless of the partnership's basis in the properties.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1998
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Avoid tax traps for partnership basis adjustments
Article Abstract:
An increasing number of small and medium-sized businesses are taking the partnership form because the limited liability company structure provides liability protection to members. Another reason for this resurgence in popularity is the introduction of new check-the-box Regulations that simplify partnership tax treatment for an electing eligible entity. In light of the expanded prestige of partnerships, tax professionals should take the time to understand the provisions of Subchapter K as much as Subchapter C. Subchapter K contains Secs 701 to 761 and features many details that may lead to expensive mistakes. Correction actions may be taken under Temporary Regulations 301.9100-2T(a)(2)(vi), 301.9100-2T(d) and 301.9100-3T, all of which offer relief to taxpayers and tax advisors by allowing extensions of time for making delinquent elections.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1997
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