No Gain or Loss is recognized to a partnership or partner on a contribution of property in exchange for a partnership interest.
100
This establishes what a partner is entitled to receive upon liquidation of the partnership
The balance in the partner's capital account
100
General rule of I.R.C. section 731
No gain or loss to partner or partnership on a distribution from the partnership
100
I.R.C. Section 751 Assets
Unrealized Receivables and Inventory
100
This can never be reduced below zero
A partner's outside basis (or interest in his partnership interest)
200
The tax treatment of a cash distribution to a partner
Nontaxable but reduces basis (but not below zero); gain to partner to the extent cash distribution exceeds outside basis
200
In determining his or her income tax each partner takes this into account
Distributive share of partnership income or loss
200
The three limitations on deductibility of partnership losses by a partner in order of application
Basis limitations
At risk rules
Passive loss rules
200
The only situation resulting in a loss upon a liquidation
In a liquidating distribution where only cash and/or 751 assets are distributed and partner's outside basis is greater than the cash and inside basis of the assets distributed
200
A partner's initial outside basis in a two person equal partnership if he contributes property to the partnership in exchange for a partnership interest with a basis of $40, fair market value of $100 and subject to a $20 non recourse liability
$30
($40 adjusted basis less $20 debt relief (cash distribution) plus $10 debt incurred (cash contribution))
300
Difference between a partner's outside basis and her at risk amount
Share of non recourse financing
300
How income is allocated if there is no partnership agreement or is the partnership agreement contains allocations which lack substantial economic effect
In accordance with the partner's interest in the partnership
300
The three primary reasons why a partner's outside basis is important
(i) determines when distributions are taxable
(ii) provides a limit on the deductibility of losses
(iii) determines partner's gain or loss on sale or liquidation of partnership interest
300
How recourse liabilities are allocated among partners
In accordance with the portion of the liability for which the partner bears the economic risk of loss
300
The tax consequence of a capital interest received subject to the performance of future services
It is not taxable under I.R.C. section 83 until the restrictions lapse (unless an 83(b) election is made)
400
The tax treatment of organizational expenses
Generally, not deductible by the partnership, but $5,000 may be deducted in year business begins and remainder may be amortizable over 180 months
400
Two kinds of special allocations deemed to be not substantial
Shifting Allocation and Transitory Allocation
400
The amount by which a liability with respect to property exceeds the property's adjusted basis
Minimum gain
400
The reason why most limited partnerships are passive activities for the limited partners
The presumption that a limited partner cannot materially participate in the partnership
400
The provision in the partnership agreement that restores a partner's negative capital account resulting from an unanticipated distribution
Qualified Income Offset
500
The Big Three (for determining economic effect)
(i) Proper maintenance of capital accounts (in accordance with the regs)
(ii) Liquidating distributions must be made in accordance with positive capital account balances
(iii) Unlimited deficit restoration obligation
500
Elements of a guaranteed payment
Payment made to a partner
In his or her capacity as partner
For services or use of capital
Without regard to partnership income
500
If a section 754 election is in effect the inside basis of assets may be adjusted upon the occurrence of these two events
A transfer of partnership interest (743(b)) and certain distributions (734(b))
500
The three situations classified as a 736(a) payment
A partnership withdrawal payment representing
(i) a premium payment
(ii) a payment for partner's share of unrealized receivables in a service partnership
(iii) a payment for partner's share of "unstated" goodwill in a service partnership
500
This is how reductions in basis are allocated among a particular class of property
First to property that has built in loss, in proportion to the unrealized loss, then to all properties in proportion to their current adjusted bases