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Forming a partnership

SEE 2 Chapter 3 · IRS outline 1B2, 1B4, 1B7

Mira and Jon are ready to open Pine Street Bakery. Mira brings cash. Jon brings an oven and a small building with a mortgage. A pastry chef named Rosa will join for a share of the business and no money at all. It looks like one simple handshake, but each person has walked in carrying a different tax question. Nadia sits them down and works through who has basis, who has gain and who owes tax on day one.

In this chapter

1. Partnership agreements, general and limited partners
2. Contributing property: no tax today
3. Property with a mortgage: the debt shuffle
4. Trading services for a partnership interest
5. Family partnerships
6. Allocations: who is taxed on what

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

What this chapter covers

• Partnership agreements
• general and limited partners
• section 721 contributions
• property with debt
• services for an interest
• family partnerships
• special allocations

Chapter 2: Tax years, information returns and hobby losses · Chapter 4: Running a partnership: flow-through and partner basis