17-May-2019 8:11pm
17-May-2019 8:16pm
Subtitle A. So does all this mean there's a recognized gain?notwithstanding any other provision of
18-May-2019 9:22am
Nilodop wrote:The more intriguing question is whether there are any hot assets in. the partnership, particularly section 1245 assets, and whether there are any liabilities being assumed by W, maybe even liabilities that created negative capital.
Typically we don't worry about gain on transactions between spouses because section 1041 says it's not recognized, and that it's treated as a gift (which of course your transaction is anyway, but for section 1001 and reg. 1.1001-2(a).). But then we have the interaction among 731, 751, and 1245. 731(d) says that 731 does not apply to the extent otherwise provided by section 751. In turn, 751 says that hot assets include 1245 assets, and 1245 says it appliesSubtitle A. So does all this mean there's a recognized gain?notwithstanding any other provision of
Also, upon re-reading, I don't see any description of the nature of the partnership and its assets. For instance, was it essentially a partnership that invested in marketable securities? If so, 731 has rules that might cause gain to be recognized, but probably that gain is excluded by 1041.
P.S. I just took a look at some regs., and I think income through the end of the date the partnership terminates (date of gift) is included in the final partnership return.
18-May-2019 10:09am
If your business is set up as a partnership, then whenever there is a change in who the partners are, there's technically a dissolution of the old partnership and a creation of a new partnership that includes the new partners. That raises the question of whether you have to zero out the balance sheet of the old partnership.
Tax regulations aren't clear, and there's disagreement on how best to account for this. Some zero out the balances as they would with any dissolution. Others prefer to keep the old account balances immediately prior to dissolution and transfer those numbers to the new partnership directly. In the absence of more definitive guidance from tax authorities, it's probably safest to go ahead and zero out balance sheets regardless.
The tax return of the old partnership should have the technical termination and final return boxes checked. Since, upon the technical termination of a partnership, it is deemed that the old partnership contributes all of its assets and liabilities to the new partnership, it is recommended that the ending balance sheet of the old partnership be zeroed out. A statement should be attached to the tax return explaining the transaction(s) that triggered the technical termination and showing what the ending balance sheet was immediately prior to the partnership termination. The Schedules K-1 of the partners of the old partnership should reflect zero ending capital accounts and should be marked final.
18-May-2019 12:27pm
20-May-2019 6:18am
20-May-2019 8:08am
Nilodop wrote:There's one thing I'm not clear on, however: is an asset expensed under the de minimis safe harbor that would otherwise be a 1245 asset considered to be a 1245 asset?. Here's an old thread that's on point but may not answer the question. viewtopic.php?f=8&t=8095
Nilodop wrote:The tax return of the old partnership should have the technical termination and final return boxes checked. You have an actual termination.
Nilodop wrote:Which regs?. 1.706-4, 1.704-1(b), 1.708-1(b), maybe more.
Jeff-Ohio wrote:There was quite a bit of commentary on 99-6 when it came out. And it doesn’t address a non-taxable transfer, like a gift. The AICPA’s comments can be found here:
https://www.aicpa.org/content/dam/aicpa ... submit.pdf
The construct recommended by the AICPA is on Page 22.
21-May-2019 7:14am
There's something a little odd about presenting the 100% distribution to the wife on the 1065, which is a transaction that occurs after the LLC is no longer a partnership
21-May-2019 2:32pm