[ITSTIMETOPASS]

So I just read about how a partner contributing property to a partnership which has a Excess Liability (Boot) = a gain to the partner. Does this gain increase the basis in the partnership for that partner? I’m not sure I understand this taxable boot (gain) concept.

AUD: PASSED!
REG: Q4 2015
FAR:
BEC:

[melody_pinaycpa]

Boot received which could take the form of cash received, relief of liability or fmv of other property contributed would be the recognized gain if it is lesser than realized gain. Partner's basis would be decrease by liability assumed by partnership i.e relief of liability this is NOT the share of partner's liability. On the other hand, if the boot received is the recognized gain then it is added to the adjusted basis of property contributed to arrive at partnership's basis of the contributed property.

FAR (Apr 2015) - 88
AUD (July 2015) - 86
BEC (Oct 2015) - 82
REG - 73, 70, retake Sept 2016

[SkiBum1990]

In regards to exchange for partnership interest, taxable gain/income is typically NOT recognized.

2 exceptions:
1) FMV of all services done in exchange = taxed as ordinary income
2) excess of your liabilities now assumed by the partnership over your basis = taxable gain

This excess does not increase your initial basis. — However, the debt now assumed by the partnership decreases your basis.

“Basis” is a bit confusing, but can be understood by many MCQ.

"The mind can only absorb as much as the seat can take"

B - 79
A - 68, __ (got bumped from Aug 4 release to Aug 23-THANKS AICPA)
R - Oct
F - Nov (HA! 1 month to study working full-time; love NTS rules)

[Author]

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