Unit 2 Partnership formation Liabilities and Organizational Costs

Unit 2 Partnership formation Liabilities and Organizational Costs

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Partnership Formation Liabilities and Organizational Costs
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Objectives 1. Determine the Impact of Liabilities when forming a partnership 2. Calculate deductible organization expenses.
Background image of page 2
Liabilities
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Liabilities--In General Each partner is treated as making a cash contribution to the partnership in an amount equal to his or her share. §752(a). As a result, each partner is given credit in her outside basis for her share of partnership liabilities.
Background image of page 4
Allocating Liabilities Recourse liabilities are allocated to those partners who bear the "economic risk of loss" associated with those liabilities. As a general rule, nonrecourse liabilities are allocated among the partners in the same way the partners share profits.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Changes in Liabilities are Like Cash Section 752 treats changes in a partner's share of liabilities as cash transactions When there is a net increase in a partner's
Background image of page 6
Changes in Liabilities are Like Cash Section 752 treats changes in a partner's share of liabilities as cash transactions When there is a net decrease share of partnership liabilities, the partner is treated as having received a cash distribution.
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 25

Unit 2 Partnership formation Liabilities and Organizational Costs

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online