Partnership Tax Implications During the Liquidation Phase
Closing a partnership is not simply a matter of shutting down the bank account and dividing the remaining cash among the partners. A partnership liquidation can involve selling equipment and real estate, collecting receivables, paying creditors, repaying loans, disposing of inventory, calculating depreciation recapture, adjusting each partner’s outside basis, and distributing remaining cash or property. […]
Partnership Tax Implications During the Operation Phase
Operating a partnership creates tax issues that are different from simply calculating how much cash the business earned. Partners must understand how taxable income is allocated, how Schedule K-1 works, how distributions affect basis, how guaranteed payments are treated, how partnership debt affects each partner, and whether business losses can actually be deducted. A partnership […]
Partnership Tax Implications During the Contribution Phase
When business owners form or fund a partnership, they may contribute cash, real estate, equipment, inventory, intellectual property, or other assets. While partnership contributions are often structured so that no immediate federal income tax is recognized, the transaction can create important tax consequences that continue throughout the life of the partnership. Understanding the tax implications […]