Partnerships Chapter 6

Partnerships Chapter 6 - Partnership Chapter 6 Click toof...

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Click to edit Master subtitle style Sale of a Partnership INterest Partnership Chapter 6
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A.Consequences To The Selling Partner 1. Modified Entity Approach Section 741 The gain or loss from the sale of the partnership interest is treated as a capital gain or loss. Section 751 But, ordinary gain or loss to the extent that the gain or loss is attributable to: a a) unrealized receivables or a b) inventory items.
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Calculation of the gain or loss on Sale First compute the total realized gain or loss on the sale: a Amount realized less adjusted basis in partnership interest. Amount realized includes Cash received + FMV of property received + partner's relief of partnership liabilities under Crane and Sec. 752(d). Adjusted basis Outside basis + or - seller's share of partnership income or loss for the current year up to the date of sale + or – Partner’s share of the change in partnership liabilities to date of sale.
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Calculation of gain or loss on Sale The sale of 100% interest a Partnership's tax year closes with respect to the partner. a Income or loss arising from the short year passes through to the selling partner and is included in outside basis. Sale of a Partial interest a Partnership's tax year closes with respect to the partial interest. a The selling partner's distributive share of income or loss is determined by taking into account the partner's varying interest in the partnership during the tax year.
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Calculation of Gain or Loss on Sale Ordinary income or loss under Sec. 751 1. Unrealized receivables 2. Substantially appreciated inventory
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Calculation of Gain or Loss on Sale Unrealized receivables include: Rights to payment for non-capital goods and services which have not previously been included in income Short-term debt obligations Depreciation recapture
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Substantially Appreciate Inventory includes: Any property which could not be considered a capital asset or a Section 1231 asset. a Notice that also includes unrealized receivables An asset can constitute both an unrealized receivable and an inventory item. The unrealized receivables are combined with other inventory items in determining whether those items are substantially appreciated. An item that is treated as both and unrealized receivable and an
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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 6 - Partnership Chapter 6 Click toof...

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