[jeff]

Welcome to the Q2 2016 CPA Exam Study Group for REG.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Bear-Bear]

Dammit, that's right. And when partnerships distribute property, what are the rules? I keep forgetting these!!

[Just3Letters]

I think partnerships are pretty close to the same. When I get a question about it I can usually do it but I can't just think up the rules sometimes 🙁

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Spartans92]

There just so many goddamn rules to remember. ugh.. as mentioned above ^^ no G/L for property distribution under partnerships if in excess of basis..

BEC- PASS

[Bear-Bear]

Ok, I think I get it.

When property is distributed, the PERSON doesn't recognize a gain. But the partnership/company does IF the FMV is above the basis.

When cash is distributed, the person recognizes a gain if it's above their basis.

Now, how about liquidating versus non-liquidating for the partnership/company? What's the difference as far as gain goes?

[Spartans92]

I forgot a ton of stuff i learned this morning on C-corp.. wtf! I just did a SIM and I stared at it for 5 mins and eventually gave up. 🙁

BEC- PASS

[Bear-Bear]

i am comfortable with how distributions impact the shareholder/partner, just now how they impact the company/partnership. Argh. I'll get it, hopefully.

[Just3Letters]

Here are a bunch of paragraphs of mindless knowledge from Cornell Law if you want it:

(a) Distributions other than in liquidation of a partner’s interest
(1) General rule
The basis of property (other than money) distributed by a partnership to a partner other than in liquidation of the partner’s interest shall, except as provided in paragraph (2), be its adjusted basis to the partnership immediately before such distribution.

(2) Limitation
The basis to the distributee partner of property to which paragraph (1) is applicable shall not exceed the adjusted basis of such partner’s interest in the partnership reduced by any money distributed in the same transaction.

(b) Distributions in liquidation
The basis of property (other than money) distributed by a partnership to a partner in liquidation of the partner’s interest shall be an amount equal to the adjusted basis of such partner’s interest in the partnership reduced by any money distributed in the same transaction.

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Spartans92]

Thanks Just3!

BEC- PASS

[Bear-Bear]

^^^That's good stuff. Just remember: if non-liquidating it cant go below zero. If liquidating, it HAS to go to zero.

[CPA2BEE]

Corporations

– Liquidating and Non Liquidating property distributions generate gains to the Corp for appreciated property (FMV>Basis)

Partnerships

– Partnerships are flow-through entities and do not recognize gains, gains are recognized at the partner level

FAR - 80
AUD - 82
BEC - 80
REG - 85

ETHICS - 90
EXPERIENCE - COMPLETE
Application for California license mailed 8/4/2016

[Just3Letters]

Yeah that's pretty much exactly how I think about it Bear-Bear. And for liquidating, if you get cash AND property, you decrease your basis for the cash FIRST and any basis left over is your basis in that property

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Just3Letters]

Can we just take this test together? Everybody meet me in Portland, Oregon on Sunday!

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Bear-Bear]

Sounds good to me. Y'all have Bigfoots (Bigfeet?) up there and I've always wanted to see one.

[Bear-Bear]

Ok, this simplifies it. Per wiley, partnerships generally do not recognize a gain or loss on distributions.

[Just3Letters]

lol yes we do! It's just a struggle sometimes because they have no regards whatsoever for our busy lives. When they cross the interstate and busy city streets it can block traffic for hours

FAR- 81
REG- 81
BEC- Aug 22, 2016
AUD- TBD

[Author]

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