This course is a part of the program leading to:
Master of Science in Taxation
Master of Science in Legal Studies
Master of Science in Compliance Law
TAX-501: Federal Income Taxation
FIN-501: Financial Accounting
The purpose of this course is to institute you into the "mysteries" of Subchapter K of the Internal Revenue Code. The course will cover the federal income tax aspects of the formation of a partnership; the operation of the partnership and the allocation among its members of its income, deductions, etc.; the disposition by partners of interests in the partnership; and the consequences of a partnership’s termination. There will be some emphasis on potential pitfalls for the taxpayer (and the taxpayer’s advisor – i.e., you) in the law of partnership taxation (including Judge Raum's dreaded Section 736) as well as some debate on the merits and demerits of other provisions of Subchapter K (e.g., Section 754, Section 751(b), the 704(b) regulations).
At the completion of this course, the student will be able to:
- Identify when a partnership is created for federal tax purposes.
- Create the partnership’s initial book and tax balance sheets.
- Compute partnership income and determine the effect of partnership losses.
- Allocate among the partners ordinary partnership tax items.
- Allocate among the partners special items like nonrecourse deductions.
- Determine the partners’ respective “shares” of partnership liabilities.
- Compute the tax effect of “guaranteed payments” to partners.
- Identify (and avoid) “disguised fees” and “disguised sales”.
- Determine the tax consequences of distributions of partnership property.
- Compute the amount and character of gain or loss when a partnership interest is sold.
- Compute and allocate adjustments to inside basis.
- Identify and avoid so-called tax avoidance transactions (“mixing bowls”).
- Compute the amount and character of gain or loss relating to Section 751 property.
- Compute the amount and character of gain or loss on liquidating distributions.
- Compare the liquidation of a partnership interest versus its sale.
- Terminate (or avoid terminating) a partnership for federal tax purposes.