Sale of land by partnership to related corporation yielded capital gain

Article Abstract:

The Mesquite East partnership bought parcels of land for investment. The partnership sold the land to Town East Corp, which developed it and later also sold it to third parties. The partnership reported sales income as capital gains on the presumption that land was a capital asset. The IRS, confering with the Tax Court, considered it an ordinary gain and concluded that the partnership was selling land as its business. The Fifth Court, an ppellate court, considered the land as capital asset and dismissed IRS' conclusion.

Cases, Affiliated corporations, Capital gains tax, Related party transactions

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Uncertainty clouds the tax consequences of the bankruptcy of a general partner

Article Abstract:

An analysis of the tax consequences arising from the bankruptcy of a general partner is presented. It is shown that filing a bankruptcy petition entails tax consequences for the general partner as well as the limited partnership itself. However, federal tax laws are unclear on bankruptcy applications for a general partner. This lack of clarity is a result of lack of guidance from the IRS, bankruptcy law contradictions and conflicting judicial decisions.

Analysis, Taxation, Limited partnership, Limited partnerships, Bankruptcy

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Application of the passive activity loss disposition rules to partnership redemptions

Article Abstract:

Suspended losses incurred from a passive activity under partnership redemptions can be utilized to mark down nonpassive income when the activity is disposed of. Upon issuance, regulations must take into account the wider objective of the passive loss limitations and disposition regulations, rather than conservatively concentrating on the wording of the rule and legislative history.

Partnerships, Management, Loss deductions, Business losses

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