Question
I am working on a paper for my Advanced Partnership Taxation course. Please define/explain in detail the following: -If a partnership agreement contains special allocations
I am working on a paper for my Advanced Partnership Taxation course. Please define/explain in detail the following:
-If a partnership agreement contains special allocations that do not have substantial economic effect, what are the consequences?
-Please discuss the different ways a payment to a retiring partner may be treated.
-Discuss a situation in which a partner could recognize gain on a partnership distribution even if no cash is distributed to the partner.
-For a special allocation of partnership items among the partners to be respected by the IRS, the special allocation must have substantial economic effect. Please explain how a partnership can meet the economic effect portion of the substantial economic effect requirement.
-Explain how a partnership would fail the substantiality portion of the substantial economic effect requirement.
-The substantial economic effect requirement will nevertheless be met for nonrecourse deductions if the partnership agreement contains a minimum gain chargeback. Explain generally what a minimum gain chargeback is.
-Define a Section 754 election. What does a Section 754 election allow a partnership to do?
-What does QIO stand for in the context of economic effect? Explain what a QIO provision causes the partnership to do. Why would members of an LLC be particularly interested in a QIO as opposed to the alternative under the general test for economic effect?
-Regarding the substantiality prong of the substantial economic effect test, explain what shifting tax consequences are and what transitory allocations are.
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