Essay About Loss Property Precontribution Loss And Liability Basis

Partnership Tax
Partnership vs S Corporation  P ship S corp Contribution appreciated propertyPrecontribution gain allocate to the contributing partner 704c Allocate among all members  Contributed built in loss property Precontribution loss allocate to contributing partnerLoss among all members Corp: basis= Lower FMV  §362e(2); excluding liability Basis for owners Including debt Only include direct loan to corp Allocation of income/deductions, contributed properties Basis include debt Income/loss *percentage interest Maintain stock & debt basis § 1367Debt basis increased only by direct loans § 1366d Decrease stock basis first; restore debt basis first Rest carry over Liability basis & loss limitation Allocate debt among partners 704dRecourse (A/p; salary payable) LP: to GP or whoever personally guarantees  Nonrecourse(mortgage secured only by property) LP and GP equally Maintain stock & debt basis § 1367Debt basis increased only by direct loans § 1366d Decrease stock basis first; restore debt basis first Payment types & Employment taxes GP–SE tax Distributing share–SE tax if working incomeSalary–payroll tax (half of SE tax) Distributing shareDistribution of appreciated property 731 carry over basis; basis step down to 0 but no gain/lossCorporation recognize gain but no lossGains allocate to ALL members Distributee takes FMV basis, then Capital GainNo capital loss  Owner sell interest in entity§751(a) hot asset reclassify as ordinary income Rest is capital All gain/loss capitalDistribution of property in liquidation Capital asset basis adjusted up and down to reach 0Corp recognize gain: ordinary & capital gainALL Members basis increase Distribute @ FMV Members recognize capital gain or loss