Disposition of Partnership Interest - Suspended Losses
When you sell your entire interest in a partnerhsip
1. At-Risk Losses –> Can offset gain on sale only
2. Passive losses –> Become fully deductible against all income
3. Tax basis losses –> Only matter if allowed after above limits
Sell = Free Passive losses, limited at-risk to gain
Nonliquidation distribution - When is gain recognized
- Cash distributed > Partners basis –> Gain Recognized
- Property distributed –> No gain recognized (Take carryover basis, limited to remaining basis)
- Basis order: Cash 1st –> the property
Only excess cash creates gain
Passive Activity Loss (PAL) Rule - AGI Impact
Passive Losses ONLY Offset passive income
Cannot offset active or portfolio income
Excess passive loss = suspended (Carryforward)
AGI = Active income + portfolio income + (passive income - passive losses allowed)
What is the recognized gain rule for a like-kind exchange
Recognized gain = lesser of
1. realized gain 2. boot received
boot paid –> NO gain recognized
AGI Impact of Rental Loss Deductions
If active participation - Up to 25k rental loss allowed
Passive losses - Only offset passive income
Property contribution with liability - Gain recognition rule
No gain on contribution unless: Liabilities assumed > basis
Recognized gain = liabilities - basis (if positive)
Order of Rental Loss Deduction
Must pass 3 limits in order
- Tax Basis Limit
- At-risk Limit
- Passive Activity Limit
Section 1244 Stock Loss - Limit & Character (Single Taxpayer)
Max Deduction - 50k per year
Character - Always ordinary loss
What is it when the federal gift tax and estate tax are merged
The unified transfer tax
What is the Formula for Taxpayers basis in new real property received
FMV of Property received - Deferred gain + Deferred loss
Partner contributes property (With S Corp assuming mortgage) to new S Corp and receives stock, What is the partners basis in stock
Partner basis in stock is Basis in property - Mortgage assumed by S Corp
Section 1245 requires what gain to be recaptured on sale of depreciated equipment
Section 1245 only requires lesser of depreciation taken or gain recognized to be recaptured
How does a corp calculate gain value in a distribution of land
Corp recognizes gain which is the difference between FMV and adjusted basis of land
A Business use depreciable property held for > 1 year qualifies as what type of proeprty
As a 1231 Property
Includes Real & Personal Property + Involuntary Conversions
Key to Section 1245
All depreciation is recaptured not just excess over straight-line
Section 1231 Look-back Rule
Prior 5-year losses - Recapture current gains as ordinary
Who are Related Parties - Are losses allowed between them
Related parties are family (Not in-laws) as well as 50% owned corporations
Losses are not allowed ever
What is the Gift Loan exception
No imputed interest if loan id less than or equal to $10,000
What is Imputed Interest on A Gift Loan less than or equal to $100,000
Imputed interest limited to borrowers net investment income
