Partnerships Chapter 1

Partnerships Chapter 1 - Partnerships Chapter1...

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Understanding Tax Authority. n Internal Revenue Code. n Treasury Regulations n Revenue Procedures n Initialized by the IRS to tax lawyers and  CPA's explaining IRS expectations n They do not interpret a statutory provision.   n They provide instruction.
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Revenue Rulings n Statement of IRS position on a  particular tax issue. n They bind the IRS but not the taxpayer. n Can be overturned by a court.  n They have exactly the same force and  effect of a Treasury Regulation.  
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Revenue Rulings cont. n If enough Revenue Rulings are issued on a topic, the  IRS will sometimes combine the Revenue Rulings  into Treasury Regulations. n  Two ways that Revenue Rulings can get started: n Taxpayer requests a ruling.  The issue is one that the IRS  wants to make a point with - therefore, the IRS will research  the issue and have the revenue ruling approved by the  treasury department.   n Sometimes a revenue agent will ask the district director how  to deal with a particular issue (Termites as a casualty loss.) 
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Difference between a Tax Court Case and  a TCM (Tax Court Memorandum Case.) n Tax Court cases are reviewed and  approved by all deciding judges.  If a  judge does not approve the decision, he  will write a dissenting opinion.  n TCM's are not reviewed and do not  establish precedent.
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Overview of a partnership n Fundamental idea of a partnership is  that 2 or more persons join together to  make a profit.   n Unlimited liability in terms of agency  issues.
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Overview of a Partnership   n The concept of "assignment" of income  in a partnership is unique to a  partnership.  n In all other tax situations, you are not  allowed to assign income.  But in a  partnership you are allowed to assign  income in proportion to capital invested so 
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Overview of a Partnership  Continued All partnership agreements are for a limited life.   However, they can be renewed. n A partner cannot be a member of a competing  partnership because this is a position of trust.
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Advantages of Partnership  Form: n Easy to form and easy to operate.   n Flexible.  Can allocate profits and losses as desired  as long as there is a "business reason”. n
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This note was uploaded on 01/20/2011 for the course ACC 617 taught by Professor Staff during the Fall '08 term at Kentucky.

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Partnerships Chapter 1 - Partnerships Chapter1...

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