section 732 - nonrecognition (reversal of 721) - partner's basis in distributed property = partnerships basis in distributed property Termination sales of partnership assets of 50% or more liquidating distribution of all the partners down to only one partner 761 - definition 761 - definition 720 - contributions 700s & 770s - operations 730 - distributions 740s - sales of partnership interests 750s - multiple applications 752 - liabilities 751 - ord. income assets 754 election for basis adjustments ============================================================== ============== Reg § 1.701-1. Partners, not partnership, subject to tax Partners are liable for income tax only in their separate capacities. Partnerships as such are not subject to the income tax imposed by subtitle A but are required to make returns of income under the provisions of section 6031 and the regulations thereunder. For definition of the terms “partner” and “partnership”, see sections 761 and 7701(a)(2), and the regulations thereunder. For provisions relating to the election of certain partnerships to be taxed as domestic corporations, see section 1361 and the regulations thereunder. Reg § 1.701-2 . Anti-abuse rule
LSLR 37 - 43 - Summary Assets are kept on the books at historical cost Contributed property is recorded at FMV, but for Tax purposes are kept on the books at the partner's basis Section 704(c)(1)(A) - precontribution gain on contributed assets first allocated solely to the contributing partner when the partnership sells the asset. Do not adjust the capital account (already accounted for in the capital balance). Post-contribution gain/(loss) - allocate to all the partners Uniform Partnership Act - absent a partnership agreement - profits will be shared equally LSLR 4 -15 - Summary Entity classification for Federal purposes Check-the-box (Section 7701(a)(3)) unincorporated entities automatically will be classified as partnerships unless the entity elects to be an association taxable as a C Corp single-member LLCs - automatically disregarded (except in community property states where a husband a wife both own it, then they can choose) foreign organizations - treated as: partnerships if at least one member does not have limited liability association if all member have limited liability disregarded if a single owner that does not have limited liability election effective up to 75 before or 12 months after the election is filed can elect once every 60 months election by officer or members Existence of an entity Podell v. Commissioner Petitioner claims a capital gain on sale of real estate IRS claims a partnership was inherent in the way the petitioner and Young transacted real estate business - leading to the sale of real estate being treated as ordinary income T.C. finds that a joint venture was formed under Section 761(a) Joint venture is "a special combination of two or more persons, where in some specific venture a profit is jointly sought without any actual partnership or corporate designation" Elements of a joint venture include: a contract (express or implied) showing intent of the parties that a
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