Partnership Income Taxation

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  • Edition: 4th
  • Format: Nonspecific Binding
  • Copyright: 2005-03-30
  • Publisher: West Academic

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Supplemental Materials

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This handbook examines partnership tax laws, enabling readers to easily understand specific provisions within a larger context. Some of the topics covered include what constitutes a partnership; partnerships vs. corporations; partnership vs. co-ownership of property; the pass-through principle of partnership taxation; an introduction to partnership debt; allocations of partnership income; transactions between partnerships and their partners; sales of partnership interests; partnership distributions; payments to retiring partners; and the death of a partner.

Table of Contents

Prefacep. v
The Pass-through Principle of Partnership Taxationp. 1
Introductionp. 1
Illustrationp. 3
The Timing of Partnership Incomep. 5
The Duration of a Partnershipp. 6
Partners as Self-Employed Taxpayersp. 6
The "Anti-Abuse" Regulationsp. 8
Comparison with Subchapter Sp. 10
An Introduction to Partnership Basis and Limits on Lossesp. 11
The Tax Basis of Partnership Interests and Partnership Propertyp. 11
The Effects of Partnership Debt Transactions Upon Basisp. 13
Limits on the Deductibility of Partnership Lossesp. 14
Section 704(d)p. 15
The at-Risk Rules of Section 465p. 16
The Passive-Loss Rules of Section 469p. 17
Comparison with Subchapter Sp. 19
Contributions to Partnershipsp. 21
Contributions of Propertyp. 21
The Statutory Patternp. 21
Holding Periodsp. 22
Contributions of Encumbered Propertyp. 23
Depreciation Recapturep. 24
Character Issues: Section 724p. 25
Contributions of Servicesp. 26
Receipt of an Interest in Partnership Capitalp. 26
Receipt of an Interest in Partnership Profitsp. 29
Contributions Distinguished from other Transactionsp. 35
Contribution vs. Sale to Partnershipp. 36
Contribution vs. Sale or Exchange between Partnersp. 39
Comparison with Subchapter Sp. 39
Allocations of Partnership Income, Deductions, and Credits: An Introductionp. 43
An Overview of the Code and Regulationsp. 43
The "Substantial Economic Effect" Testp. 44
Introductionp. 44
Capital Accountsp. 45
The "Simple" Capital-Account Test for Substantial Economic Effect: Orrisch v. Commissionerp. 49
The "Substantial Economic Effect" Regulationsp. 52
Determining "Economic Effect" When Capital-Account Deficits Need Not Be Repaidp. 53
The "Substantiality" Rulesp. 56
Some Special Problemsp. 59
Depreciationp. 59
Deductions Attributable to Nonrecourse Debtp. 63
Interaction of Nonrecourse Deductions with the Alternate Test for Economic Effectp. 68
Allocating Creditsp. 70
Comparison with Subchapter Sp. 70
Allocations Attributable to Contributed Property: Section 704(c)p. 71
Allocations of Gain or Lossp. 71
Allocations of Depreciationp. 75
The Traditional Methodp. 75
The Traditional Method with Curative Allocationsp. 77
The Remedial Allocation Methodp. 80
"Reverse [section]704(c) Allocations" Under Section 704(b)p. 83
Distributions of Section 704(c) Propertyp. 84
Distributions of Property to a Partner Who Has Contributed Section 704(c) Assetsp. 85
Transfer of Interests: Section 704(c)(1)(C)p. 87
Comparison with Subchapter Sp. 88
Partnership Allocations: Assignment-of-Income Problemsp. 89
Family Partnershipsp. 89
Last-Minute Partners: Section 706(d)p. 92
Assignments of Income Not Dealt with by Specific code Provisions: The Anti-Abuse Regulationsp. 93
Comparison with Subchapter Sp. 97
Allocation of Partnership Debtp. 99
Introductionp. 99
What is a Partnership Liability Under [section] 752?p. 99
The Definition of Recourse and Nonrecourse Debtp. 100
Introductionp. 100
Economic Risk of Loss and Constructive Liquidationp. 101
Allocation of Recourse Liabilityp. 103
In Generalp. 103
Effect of Guarantees and Indemnifications of Recourse Debtp. 106
Contributions of Property Encumbered by Recourse Debtp. 107
Allocation of Nonrecourse Liabilityp. 108
The First Tier of Nonrecourse Debt Allocationp. 108
Sufficient Basis for Nonrecourse Deductionsp. 108
Refinancingp. 109
The Second Tier of Nonrecourse Debt Allocationp. 110
The Third Tier of Nonrecourse Debt Allocationp. 111
Effects of Guarantees of Nonrecourse Debtp. 113
Obligations That are not "Liabilities" Under [section] 752p. 114
Transactions between Partnerships and Their Partnersp. 119
Income-Related Payments: Distributive Shares and Section 707(a) Paymentsp. 121
Fixed Payments: Guaranteed Payments and Section 707(a) Paymentsp. 124
Determining Whether A "Partner Capacity" Payment is a Distributive Share or a Guaranteed Paymentp. 125
Minimum Paymentsp. 125
Payments Measured by a Partnership's Gross Incomep. 128
Some Other Aspects of Transactions Between Partners and Partnershipsp. 129
Comparison with Subchapter Sp. 129
Sales of Partnership Interestsp. 131
Taxation of the Sellerp. 131
The Seller's Amount Realizedp. 131
Section 751(a)p. 132
Taxation of Look-through Gains under Section 1(h)p. 136
The Buyer's Outside and Inside Basesp. 138
The Buyer's Outside Basisp. 138
Inside Basis Adjustments under Section 743(b)p. 138
Determining the Transferee's Share of Inside Basisp. 139
Allocating [section] 743(b) Adjustments to Particular Assetsp. 142
Using the [section] 743(b) Adjustmentp. 146
The Section 754 Electionp. 147
Basis Adjustments under Section 732(d)p. 148
Collateral Effects of a Sale of a Partnership Interestp. 149
Comparison with Subchapter Sp. 150
Calculating Gain on the Sale of Stockp. 150
Character of Gain and Inside Basis Adjustments upon Transfers of Interestsp. 150
Termination by Salep. 152
Partnership Distributions: An Introductionp. 153
The General Principle of Nonrecognitionp. 154
Cases in Which Gain or Loss is Recognizedp. 160
Gain Recognitionp. 160
Liquidating Distributions on Which Loss Is Recognizedp. 162
"De Minimis" Distributions of Propertyp. 164
Distributions of Section 704(c) Propertyp. 165
Distributions Taxed under Section 737p. 165
Tax Treatment of the Partnershipp. 167
Comparison with Subchapter Sp. 167
Distributions Subject to Section 751(b)p. 169
Liquidating Distributions of Assets Other Than Section 751 Assetsp. 172
Liquidating Distributions of Section 751 Propertyp. 177
Section 751(b) and Current Distributionsp. 179
The Scope of Section 751(b): An Examplep. 181
Comparison with Subchapter Sp. 183
Payments to Retiring Partners: Section 736 and Related Problemsp. 185
Introductionp. 185
Interpreting Section 736-In Generalp. 187
Payments by Service Partnerships to General Partnersp. 188
How Section 736 Payments are Taxedp. 192
Examplesp. 194
Some Complicationsp. 197
The Relationship between Section 736 and Section 751(b)p. 197
A Refinement in the Definition of Section 736(a) Paymentsp. 198
Liquidation of an Entire Partnershipp. 199
Sales and Retirement Payments Distinguishedp. 200
Problems of "Form" and "Substance"p. 203
Comparison with Subchapter Sp. 204
Basis Adjustments under Section 734p. 205
Adjustments Under Section 734p. 206
Distributions That Change the Basis of Propertyp. 206
Distributions on Which Gain or Loss Is Recognizedp. 208
Allocating the Adjustment to Particular Assetsp. 210
Section 734 and Anti-Abuse Rulesp. 212
Comparison with Subchapter Sp. 214
The Death of a Partnerp. 215
Income in Respect of a Deceased Partnerp. 215
Introductionp. 215
The Basis of an Inherited Partnership Interestp. 216
Closing the Partnership's Taxable Year Upon the Death of a Partnerp. 221
Sale or Liquidation of a Deceased Partner's Interestp. 221
Comparison with Subchapter Sp. 222
What is a Partnership?p. 225
Partnership vs. Cost-Sharing and Employment Arrangementsp. 226
Partnership vs. Co-Ownership of Propertyp. 227
Partnership vs. Corporationp. 230
Publicly Traded Partnershipsp. 233
Electing Large Partnershipsp. 234
Table of Casesp. 237
Table of Internal Revenue Code Sectionsp. 239
Table of Treasury Regulations and Rulingsp. 242
Indexp. 245
Table of Contents provided by Ingram. All Rights Reserved.

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