Partnership Taxation, an Application Approach

Author: Joni Larson

Chapter 10, page 123, problem 1:

1. Partnership is a limited partnership that was formed this year to construct and operate luxury spa resorts. Logan was the developer for the project. He contributed $100,000 in exchange for a general partnership interest. Manny was responsible for selling the limited partnership interests to investors. To assist him in selling the interests, they prepared a prospectus describing the limited partnership interests.

To what extent would the following expenses qualify as organization expenses?

a) Amounts associated with the formation of the partnership, including:

(1) Amount paid to Logan for services he provided in organizing the partnership.

(2) Amount paid to an attorney to draft the partnership agreement.

(3) State filing fee for formation of the partnership.

(4) Amount paid to accountant in conjunction with formation of the partnership.

b) Amounts paid in conjunction with the sale of limited partnership interests, including:

(1) Amount paid to Manny for his services in selling the limited partnership interests.

(2) Amount paid to an attorney to prepare offering the documents for limited partnership interests.

(3) Amount paid for preparing and printing the prospectus.

P.S. I have been a loyal customer to Chegg for years now and I have not requested an answer to a question in years. Would you please take your time in answering this thoroughly. Thank you!