Problems and Solutions in Partnership Tax: Joni Larson
Problems and Solutions in Partnership Tax: Joni Larson
Problems and Solutions in Partnership Tax: Joni Larson
Joni Larson
Copyright © 2014
Joni Larson
All Rights Reserved
KF6452.L375 2013
343.7306'62--dc23 2013025646
Contents
Introduction ix
v
larson problems 00 fmt 11/5/13 6:01 AM Page vi
vi CONTENTS
G. Limitation of Losses 49
Summary 50
Questions 52
Solutions 55
CONTENTS vii
viii CONTENTS
Solutions 272
Introduction
Partnership taxation is often considered one of the most difficult areas of tax. However,
given the growing number of limited liabilities companies (which generally are taxed
as partnerships for tax purposes), it is extremely beneficial to have a working knowledge
of this area. In addition, partnership tax provides a flexibility found nowhere else in
the Code, affording the attorney or accountant an unparalleled opportunity to engage
in tax planning on behalf of his client.
In approaching partnership tax, it is helpful to understand a few basic concepts.
First, a partnership is a “flow-through” entity. It does not pay any tax. Rather, the
taxable items flow through the partnership and are reported by the partners. Second,
in designing the flow-through system, Congress was not always consistent in its treatment
of the status of the partnership. Sometimes it is respected as an entity, separate and
distinct from its partners. At other times, the entity is ignored and instead the arrangement
is treated as an aggregation of the partners. And, finally, at other times, a hybrid approach
is used.
The chapters that follow organize the partnership tax concepts and provisions into
cohesive groups. However, one of the things that makes partnership tax so difficult is
that the provisions are often interrelated and intertwined. In some respects, it is only
after the entire area has been studied that the overall system will make sense. As a result,
trying to fit the pieces together along the way can feel a bit like putting together a puzzle
without having seen the picture. But, once the pieces are in place, the overall picture
does make sense. And then, planning can begin.
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