Event Description

How debt is allocated to the partners in a partnership is important. It dictates how much money may be taken tax-free as a distribution, the losses that flow down to the partners, and the gain or loss on the sale of a partnership interest. However, the allocation of debt can differ depending on the type of debt that it is and the type of partner we are talking about. Not to mention that 704(c) can complicate things. And what in the world is a constructive liquidation scenario? In this session of Understanding Partnership Taxation, we will tackle the concept of debt allocations – how you do it, what it means, and why you do it!

Objectives

State how debt allocations affect the calculation of a partner’s basis in the partnershipRecognize how recourse and nonrecourse debt are allocated to partnersIdentify the tax effects of 704(c) on contributed property