Type and timing of partnership distributions can increase tax benefits to the partners
Article Abstract:
Partners in a business partnership can reduce their tax burdens by timing their partnership distributions carefully. Partners' adjusted basis is determined by making adjustments to their original contribution. The necessary adjustments include: adding additional contributions; subtracting current distributions; adding partnership taxable income, exempt income and excess deductions; and subtracting nondeductible expenses, partnership losses, and advances. The main goal in planning distributions is to avoid or delay recognizing partners' gains. Gains can be avoided or delayed by: delaying distributions if they will exceed partners' adjusted basis; making any distributions before the partnership's tax year-end property distributions; and distributing loans or promissory notes to partners if cash distributions would make them recognize a gain.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1989
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Planning property transfers to maximize depreciation deductions after TRA '86
Article Abstract:
Taxpayers can defer gain recognition on property transfers by either contributing property to an entity or exchanging for like-kind property. Each transfer method will produce different depreciation deductions for the taxpayer. The method selected depends on the particular needs of the taxpayer; different transfer methods may preserve an ACRS election, reduce alternative minimum tax, or avoid short year rules. The timing of the transfer may also avoid additional depreciation limitations.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1988
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