[yomomma]

Does anybody know the main differences between a C Corp. and Partnership formation?

– Generally they both don’t result in gain or loss.

– Services rendered are taxed by fair market value

– Both recognize gain when the amount of Liability Relieved by contributor is larger than the amount of property basis contributed. (BUT! Partnership interest % must be applied and partners share the Liablity which affects the basis when two or more partners are contributing)

These are the situations that I know of, and the only difference I know is the Liability Relieved by Partners are shared with other partners when contributing to form a partnership whereas forming a C Corp does not do that.

FAR - 79
AUD - 82
REG - 83
BEC - 77 Booya

[barelystayingsane]

For partnerships, if the partner contributes appreciated or depreciated property, that gain/loss is attributed to that partner if the partnership gets rid of the property, with the remainder of the gain/loss being allocated among all of the partners, (including the partner who contributed the property). I don't believe this is the case for corporations.

On the business law side of things, there are a couple differences between corporation and partnership formation, but I'm not sure if you're interested in those or not.

[Anonymous]

big difference

for corporation:

-no gain recognition if transfer meets Sec 351 requirement: property solely transferred for stock for control at least 80% recognizes no gain or loss. but if SH receives cash or other property, gain is recognized to the extent of the FMV of the property; if liability of the property is assumed, SH recognizes gain only if such assumption is for tax avoidance, or assumption is over the adjusted basis of the property; also, SH may recognize gain (ordinary income) if he provides services. recognition is to the extent of the FMV of the services.

-SH's basis=adjusted basis of the property + gain recognition – liability assumed (always calculated in basis computation) – other property received.

Corporation's basis in the property=SH's adjusted basis and SH's recognition of gain.

for partnership:

-gain recognition only if liability assumed over basis (to the extent of the portion that other partners assumed), services provided, and if partner transfers appreciated property to incorporate/form the partnership for investment purpose (this is tested rarely).

-partner's basis in the partnership=adjusted basis of the propert transferred or FMV of the services. partnership's basis=partner's basis.

[Author]

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