Video: Tax Implications of Various Partnership Transactions

Tax Planning for Partnerships involves strategizing to optimize the tax obligations of entities structured as partnerships by leveraging various tax laws and provisions. This includes considering the timing of income recognition, the allocation of taxable income and deductions among partners, and the selection of accounting methods that align with the partnership's business objectives while maintaining compliance with tax regulations.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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All right, we're doing well, we only have a few more slides left, so stretch, grab a coffee, do what you gotta do, stay hydrated, drinking water is very underrated, so make sure you're drinking water. In partnership taxation, we've got different transactions like the contribution of non-cash property, non-liquidating distribution of non-cash property, and the sale of a partnership interest. These all have distinct tax implications for both parties, the partner and the partnership. We've got more scenarios, more scenarios for you. Again, this is so much fun, right, running through all these, but that is how you're gonna learn. Alex is gonna contribute a building to the LMN Partnership. He originally bought for $100,000, that's his basis, it's now worth $150,000. Again, no gain or loss is recognized at the time of contribution, similar to that first example we saw. I think this is actually very similar to the first one we saw. His basis and the partnership interest starts at $100,000, the difference here being this is depreciable. The partnership also takes carryover basis, basis, basis, basis, drilling that in for you. You've got to see these scenarios, you will do well if you memorize these scenarios. There are no immediate tax implications, but obviously we have the potential for future built-in gains, because we see that $50,000 there. Calculation here, Alex's basis in the partnership interest is $100,000, and that's the basis where we saw previously in that question where he had a basis of $40,000, and then you reduce it by $30,000, so we can take a distribution here. And then the partnership's basis in the building is $100,000, right? We're keeping track of the partner's items on their sheet, and then we've got the partnership's items on the partnership sheet. Perfect, perfect. Scenario two,

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Partnerships

Module: 4 Concepts, 48 Videos

Partnerships: Formation Overview

2:59

Introduction to Partnerships: Formation

4:13

Partnership Stages

10:30

Types of Partners