The Logic of Subchapter K

by Cunningham, Laura E.; Cunningham, Noel B.

• ISBN13: 9780314199850
• ISBN10: 0314199853
• Edition: 4th
• Format: Paperback
• Copyright: 2010-12-21
• Publisher: West Academic

Summary

This product is designed to guide students through the conceptual framework of subchapter K. The material avoids neither the hard questions nor the conceptual difficulties, leaving students with a firm understanding of partnership taxation. Each chapter begins with a basic explanation of the relevant provisions and the roles that they play in the overall structure of subchapter K. It includes an increasingly detailed discussion of the specific rules, including multiple illustrative examples. Each chapter builds on the earlier chapters, leading the student through subchapter K. It is appropriate for J.D. or graduate-level law school courses on partnership taxation.

Table of Contents

Acknowledgement	p. v
Table of Cases	p. xiii
Table of Code Sections	p. xv
Table of Revenue Rulings	p. xxiii
Table of Regulations	p. xxv
Choice of Entity: What is a Partnership for Tax Purposes?
Introduction	p. 1
Definition of Partnership	p. 2
Choice of Form of Doing Business	p. 4
Electing Partnership Treatment: The "Check the Box" Regulations	p. 6
The Competing Concepts: Aggregate Versus Entity	p. 7
Partnership Formation: The Basics
Introduction	p. 9
Basic Statutory Scheme	p. 10
Common Issues on Formation	p. 11
Property vs. Services	p. 11
Contributions of Appreciated (or Depreciated) Property	p. 11
Contribution of Depreciable Property	p. 12
Characterization of Gains and Losses From the Disposition of Contributed Property	p. 13
An Interim Example	p. 14
Liabilities-In General	p. 15
Contribution of Encumbered Property	p. 17
Contributions of Accounts Receivable and Payable	p. 18
Organization and Syndication Expenses	p. 19
Partnership Operations: The Basics
Introduction	p. 21
Partnership Taxable Years	p. 22
Method of Accounting	p. 26
The Computation of A Partnership's Taxable Income	p. 26
In General	p. 26
Separately Stated Items	p. 27
Partnership Elections	p. 29
Adjustments to the Partners' Outside Basis	p. 29
Financial Accounting and Maintenance of Capital Accounts
Introduction	p. 32
Essential Elements of Financial Accounting	p. 33
Basic Capital Accounting Rules	p. 34
Introduction to Tax Capital Accounts: Contributions and Revaluations	p. 38
Contributions	p. 39
Revaluations	p. 41
Partnership Allocations: Substantial Economic Effect
Background	p. 44
"Substantial Economic Effect"	p. 45
The Significance of Capital Accounts: The Orrisch Case	p. 47
Codification of Substantial Economic Effect	p. 49
The § 704(b) Regulations	p. 49
In General-Structure	p. 49
Substantial Economic Effect	p. 50
A Limitation-Family Partnerships	p. 71
Conclusion	p. 73
The Allocation of Nonrecourse Deductions
Background	p. 74
Regulations	p. 78
Introduction	p. 78
Definitions	p. 79
Illustrations	p. 83
Conclusion	p. 88
Contributions of Property: Section 704(c) and Section 704(c) Principles
Introduction	p. 90
Contributions of Property	p. 92
Nondepreciable Property	p. 92
Depreciable Property	p. 99
Choice of Methods	p. 105
Anti-abuse Rules	p. 107
Revaluations	p. 109
Partnership Liabilities
Introduction	p. 114
A Preliminary Issue: What is a Liability?	p. 116
The Regulations Governing § 1.752-1 Liabilities	p. 118
Introduction	p. 118
Economic Risk of Loss	p. 118
Sharing Recourse Liabilities	p. 119
Illustration-Recourse Liabilities	p. 120
Partners Providing Property as Security for Partnership Debt	p. 124
Sharing of Nonrecourse Liabilities	p. 125
Transactions (Other than Sales) between a Partnership and its Partners
Sections 707(a) and 707(c)	p. 129
Disguised Capital Expenditures: § 707(a)(2)(A)	p. 134
Receipt of Partnership Interest in Exchange for Services	p. 138
A Final Note: Pending Legislation	p. 142
The Sale of a Partnership Interest
Overview	p. 144
The Seller	p. 145
Statutory Scheme	p. 145
Section 751(a) Property	p. 146
Section 751(a) Computation	p. 148
Installment Sales of Partnership Interests	p. 151
The Buyer	p. 152
Effect of the Adjustment	p. 161
Related Matters-§§ 706(c) & (d)	p. 163
Closing a Partnership's Taxable Year	p. 163
Allocation of Income for the Year of Change	p. 164
Distributions-The Basics
Introduction	p. 169
Preliminary Issues	p. 170
Sections 706(c) & (d)	p. 170
Capital Accounting Rules	p. 171
Character and Holding Period of Distributed Property	p. 171
Basis of Partnership's Undistributed Property	p. 172
Recognition of Gain or Loss	p. 172
Basis of Distributed Property	p. 174
Current Distributions	p. 175
Liquidating Distributions	p. 178
Special Rule under § 732(d)	p. 184
Partnership Termination	p. 186
Optional Basis Adjustment-§ 734(b)
Introduction	p. 188
Determination of the Amount of the Adjustment-Section 734(b)	p. 189
Allocating the Adjustment Among Partnership Assets-Section 755	p. 190
Examples	p. 191
Final Thoughts	p. 197
Disproportionate Distributions
Introduction	p. 200
Section 751(b): The "Evil" and The "Cure"	p. 201
The "Evil"	p. 202
The "Cure"-§ 751(b)	p. 202
Scope	p. 206
Additional Examples	p. 207
Final Observation	p. 215
Retirement and Death of a Partner
Retirements-Overview	p. 217
Section 736(b)-Deferred Liquidation Payments	p. 218
Section 736(a) Payments	p. 220
The Relationship between § 736 and § 751(b)	p. 224
Death of a Partner	p. 224
Disguised Sales and Exchanges
Background	p. 228
Disguised Sales of Property	p. 230
The Regulations Under § 707(a)(2)(B)	p. 230
Two-Year Presumptions	p. 231
Normal Distributions	p. 232
Examples	p. 233
Liabilities	p. 235
Sections 704(c)(1)(B) and 737	p. 242
Section 704(c)(1)(B)	p. 243
Section 737	p. 245
Disguised Sales of Partnership Interests	p. 247
The Partnership Anti-Abuse Rules
Background	p. 248
The General Anti-Abuse Rule	p. 249
Intent of Subchapter K	p. 250
Facts and Circumstances	p. 250
Scope	p. 251
Examples	p. 252
Abuse of Entity Rule	p. 256
Is the Anti-Abuse Regulation Valid or Necessary?	p. 257
Index	p. 261
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