Restructuring a partnership as a tenancy in common allows partners to make tax-free exchanges of property

Article Abstract:

Amendments to Section 1031 have disallowed tax-free exchanges of partnership interests. Partners may be able to accomplish tax-free exchanges by restructuring the partnership as a tenancy in common. No gains or losses are recognized on exchanges of real property between tenants in common. However, designating ownership of property as a tenancy in common is not sufficient to avoid being treated as a partnership for income tax purposes. A tenancy in common will be treated as a partnership if the activities of the owners extend beyond maintenance, repair, and renting. Section 761 sets the requirements for distinguishing between a partnership and a tenancy in common..

Methods, Like-kind exchanges, Partnership, Partnerships

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How to establish that an advance to a shareholder was a loan

Article Abstract:

The IRS will often contend that advances made to shareholders by closely held corporations are dividends, not loans. A recent case is used as an example of how this assertion can be refuted. The determining factors are whether or not the shareholder intended to pay back the corporation, and whether or not the the corporation intended to enforce the shareholder's obligation. Factors that demonstrate bona fide intent to repay the loan include: treating the advance as a loan receivable on the books of the corporation, the existence of a note or other repayment agreement, or actual repayment by the shareholder.

Laws, regulations and rules, Accounting and auditing, Dividends, Stockholders, Close corporations, Closely held corporations, Loans, United States. Internal Revenue Service

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Use of trust as part of estate plan need not void S corporate election

Article Abstract:

Careful planning can help S corporation shareholders avoid inadvertent terminations and preserve orderly transfer of assets. Failure to properly divide a survivor's assets can in effect leave the survivor's trust and interim trust indefinitely in place by operation of law. This would in turn cause the interim trust to eventually become an ineligible shareholder. Planning before a husband's or wife's death must therefore be effected after the first dies.

Corporate taxes, Corporations, Estate planning, S corporations, Trusts and trustees, Trustees, Trusts (Law)

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