Part 1:

Although partnerships are flow-through entities, partner-partnership, partner-partner, and partner-external party transactions may have tax implications. Discuss the tax implications of each type of transaction. Focus on how gains may be triggered in each transaction type.

Part 2:

One of the most difficult part of preparing a partnership tax return is the allocation of income the partners. If there is a partnership agreement in place, it is used to allocate income. The tax prepare must follow the partnership agreement to prepare each partners Schedule K-1. Review the attachedPartnership Agreementand discuss the following:

• What is the purpose of Schedule K-1 for partnerships and S-Corporations?
• Discuss potential difficulties in allocating income using the basic partnership agreement attached above.

PLEASE DO NOT PLAGIARIZE! ANSWER ONLY NEEDS TO BE ONE TO TWO PARAGRAPHS.