R4 Conceptual Flashcards
What kind of form do partnerships have to file and by when?
An information return–>Form 1065 by April 15
They can have an extension to September 15th if necessary
Only the partnerships business income and expenses are reported on this form. The rest of the income/loss is reported on the individual partners Schedule E & 1040.
What is the tax treatment for excess losses for a partnership?
Any losses over the basis amount is carryforward and used in a future year when a basis becomes available.
What is the general rule in a partnership for the contribution of property in return for a partnership interest? What are the exceptions to this rule?
Generally, no gain or loss is recognized by the partner and the assets contributed are valued at the NBV.
Two exceptions:
1. Capital Interest Acquired for services rendered–>Use the FMV of the assets at the time as ORDINARY INCOME on their individual tax return.
- Property subject to an excess liablity
When a individual buys into a partnership, he cannot start off with his basis in the partnership income as a negative basis because of the amount of liability the other partners assumed of his mortgage. The individual will RECOGNIZE a gain in any amount that would zero out the capital account to “zero” at the start
What is the holding period for contributed capital assets or Section 1231 assets (in the hands of the contributed partner)
Includes the time held by the partner in order to keep the long-term tax preference in tact.
What is the holding period for ordinary income assets (inventory) that was contributed to the partnership by a partner
The holding period starts on the date of contribution to the partnership
When is the estate tax due on the Form 706? When do you not have to file a Form 706?
The form must be filed within 9 months of the date of death.
Only file the Form 706 when the gross value of the estate $5,250,000 exemption.
When is the estate income tax due with the Form 1041?
- Can elect to have either a calendar year–Year end Dec 31st and tax return is due on April 15th
- Elect to have a FISCAL year end and the tax return is due four months and 15th day affter the year end.
- They don’t have to make estimated tax payments for the first 2 years either.
* Don’t get confused with the estate tax (Form 706) which can have any year and the tax return is due 9 months.
What is the exemption for the estate tax?
$5,250,000
What is the exemption for the estate income tax?
$600
What is the exemption for the trust income tax for complex and simple trusts?
complex: $100
Simple: $300
