Chapter 5 Character and Presentation of Partnership Taxable Income Reading: Paragraphs 501-506.

1. Does a partnership have a limitation on the charitable contribution deduction, like an individual does? What line of Schedule K do charitable contributions go on? Does a partnership get to deduct oil and gas depletion? What box of the K-1 does the information necessary for the partners to compute depletion go in?

2. What type of income and expenses go on line 2 of Schedule K? What type of income and expense go on line 3? Why are they separated this way? Do all rental activities (such as a hotel, for instance) go on these lines?

3. Guaranteed payments to partners go on what two lines of the Form 1065? What type of interest goes on line 5 of Schedule K? What types of dividends go on line 6a of Schedule K? What type go on line 6b? Does line 6a include those on line 6b?

4. What line of Schedule K do specially allocated items of ordinary income and deductions go on? What line do Code Sec. 179 expenses go on? Is there a limitation on these at the partnership level?

5. Look at the Worksheet for Figuring Net Earnings (Loss) from Self-Employment (p. 35 for 2016) of the Form 1065 instructions. What lines from Schedule K are, in general, involved in the calculation of Self-Employment income? What guaranteed payments are included in a partners self-employment income? However, look at Rev. Rul. 65-272 and Technical Advice Memorandum 9750001. What do they tell you about using the Worksheet?

6. Identify which of the following fringe benefits are deductible to the partnership and excludible by the partner:

Child and dependent care assistance

Qualified employee discounts

Exclusion for meals and lodging

De minimis fringe benefits

Qualified moving expenses