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Partnership Taxation Issues in Estate Planning

Partnership Taxation Issues in Estate Planning. By: Carol A. Cantrell Houston, Texas. Top 7 Issues with Partnerships in an Estate or Trust. IRD of a Deceased Partner Section 754 Elections Jobs Act Mandatory Negative Basis Adjustments Distributions of Marketable Securities

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Partnership Taxation Issues in Estate Planning

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  1. Partnership Taxation Issuesin Estate Planning By: Carol A. Cantrell Houston, Texas

  2. Top 7 Issues with Partnerships in an Estate or Trust • IRD of a Deceased Partner • Section 754 Elections • Jobs Act Mandatory Negative Basis Adjustments • Distributions of Marketable Securities • Determining “Trust Income” from a Partnership • Allocating Taxes on Partnership K-1 Income • Partnership K-1 Capital Gains and DNI

  3. IRD for S Corporations § 1367(b)(4) – IRD of a deceased S corporation shareholder applies with respect to any item of income in the same manner as if the decedent had directly held his pro rata share of each item. (added in 1996).

  4. Income in Respect of a Deceased Partner § 691(e) – For application of this section to IRD of a deceased partner, see § 753. § 753 – The amount includible in gross income of a successor in interest of a deceased partner under § 736(a) is IRD under § 691.

  5. § 736(a) Payments are IRD § 736(a) - all payments from an ongoingpartnership in liquidation of a deceased or retired partner’s interest except§ 736(b) payments. § 736(b) – payments for a partner’s interest in partnership property excepta general partner’s share of cash basis accounts receivable and unstated goodwill in a service partnership.

  6. Dad’s Inside and Outside Basis

  7. Mandatory Negative Basis Adjustment under § 734(b)

  8. Distribution ofMarketable Securities

  9. Gain on Distribution ofMarketable Securities

  10. With a § 754 Election

  11. With a 754 Election

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