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Partnership distributions, exits, filing and audits

SEE 2 Chapter 5 · IRS outline 1B1, 1B6, 1B8, 1B9, 1B10, 1B11

Three years in, Pine Street Bakery is changing. Mira takes the delivery van as a distribution. Jon wants to sell out and move to the coast. A lender forgives part of a loan. Then a letter arrives from the IRS, addressed to the bakery rather than to any partner. Theo has learned how a partnership gets started and how it runs. Now Nadia shows him how money, partners and partnerships leave.

In this chapter

1. Current distributions
2. Selling a partnership interest and hot assets
3. Liquidating distributions and section 754
4. Death, retirement and ending the partnership
5. Filing, due dates and penalties
6. When a partnership's debt is cancelled
7. Partnership level audits and how to opt out

This chapter has 7 lessons and 57 practice MCQs with explanations, plus flashcards and a recall sheet.

What this chapter covers

• Distributions
• hot assets and sale of an interest
• section 754
• death and dissolution
• filing and penalties
• cancelled debt
• the centralized audit regime and opt-out

Chapter 4: Running a partnership: flow-through and partner basis · Chapter 6: Forming a corporation