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Chap015Day1_class - Chapter 15 Part I Partnerships:...

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1 Chapter 15 Part I Partnerships: Formation and Operation ± Partnership accounting: capital accounts ± Accounting for capital contributions ± Allocation of income Next Class: ± Changes in Membership
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2 Economic Importance of Partnerships ± In 2005, IRS estimates of income tax returns: about 6.3 million from corporations, versus about 2.7 million from partnerships ± Rationale: ² Combining talents, skills and capital and sharing risks ² Tax benefits ² Easily created by families and friends
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3 Tax Advantages ± Taxed on a “flow-through” (conduit) basis ² The partnership itself does not pay income taxes ² Income, deductions and tax credits are “passed through” to the partners, based on their respective percentage interests. The partners report these on their individual returns
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4 Era Ends: Goldman, Sachs to Go Public (Source: http://www.iht.com/articles/1998/06/16/goldman.t_2.php ) An era ended on Wall Street on Monday when Goldman, Sachs & Co. announced it was planning to become a corporation and sell shares to the public, giving up a partnership structure that was widely seen as inhibiting the expansion of the international securities firm.
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5 … But analysts said the decision was based on expansion concerns, not a desire to turn a quick profit on a public sale. "The issue is 'how do we make Goldman, Sachs a bigger company, how do we do acquisitions without having to pay for it in
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This note was uploaded on 05/01/2010 for the course MGMT 503 taught by Professor Staff during the Spring '08 term at Purdue.

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Chap015Day1_class - Chapter 15 Part I Partnerships:...

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