Archive for January, 2014

Money Distributed to Partners (Basis & Equity)

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Concerning money (or property) distributed to Partners:

The partner’s basis is decreased (but never below zero) by the following items:

  • The money and adjusted basis of property distributed to the partner by the partnership.
  • The partner’s distributive share of the partnership losses (including capital losses).
  • The partner’s distributive share of nondeductible partnership expenses that are not capital expenditures. This includes the partner’s share of any section 179 expenses, even if the partner cannot deduct the entire amount on his or her individual ...
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Partner’s Share of Company Liabilities

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If a partner’s share of partnership liabilities increases, or a partner’s individual liabilities increase because he or she assumes partnership liabilities, this increase is treated as a contribution of money by the partner to the partnership. However, a partner’s basis in a partnership is only increased by an increase in partnership liabilities that:

(1) create or increase the partnership’s basis in any of its assets, (2) gives rise to a current deduction to the partnership, or (3) is a nondeductible, noncapital ...

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Gifts to Clients or Customers

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A deduction is not available for business gifts made in excess of $25 to a person during the tax year.

If a taxpayer gives a gift to a member of a customer’s family, the gift is generally considered an indirect gift to the customer. This rule does not apply if taxpayer has a bona fide, independent business connection with that family member and the gift is not intended for the customer’s eventual use.

If the taxpayer and the taxpayer’s spouse both give ...

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Listed Property for Depreciation Purposes

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Listed property is any of the following:

  • Passenger automobiles weighing 6,000 pounds or less
  • Any other property used for transportation, unless it is an excepted vehicle
  • Property generally used for entertainment, recreation, or amusement (including photographic, phonographic, communication, and video-recording equipment)
  • Computers and related peripheral equipment, unless used only at a regular business establishment and owned or leased by the person operating the establishment. A regular business establishment includes a portion of a dwelling unit that is used both regularly and exclusively for business

Beginning ...

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