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Tax planning for partnerships

TCP Chapter 15 · Area III · Blueprint III.D

Partnership rules give planners room to move: who gets the depreciation on contributed property, how a partner is paid, which property is distributed to whom, how a sale of an interest is taxed and how a retiring partner is bought out. The same flexibility hides traps: disguised sales, the 7-year rules, ordinary income from hot assets. The Blueprint asks you to calculate the effects of contributing appreciated and depreciated property and of payments to partners, and to derive the results of proposed contributions, distributions and sales. Tessa and Leo return to Oak & Iron Furniture LLC and its partners Grace, Hector and Tomas. Figures are for 2026.

In this chapter

1. Contributing appreciated property: allocating depreciation
2. Contributing property with a built-in loss or special character
3. Payments to partners: guaranteed payments and disguised sales
4. Distributing property: the 7-year rules
5. Planning the sale of a partnership interest
6. Buying out a retiring partner: §736

This chapter has 6 lessons, 50 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Contributing appreciated or depreciated property
• guaranteed payments versus distributions
• §736 payments to a retiring partner
• §754 with §743(b) and §734(b)

Chapter 14: Tax planning for S corporations · Chapter 16: Nontaxable dispositions