Partnership Tax Memorandum

Partnership Tax Memorandum

Describe in detail the answers to the questions below as a tax memorandum. In addition, determine how to accomplish or avoid the effects of eliminating a partners interest. Describe the applicable code sections for the below. Since this is a memo you will not respond to each of the numbered items below prefaced as a number. You will write it as a memo that contains the answers. If you wish, you may describe each topic with a header such as (Technical Termination of Partnership Interest).

Write in complete sentences using good grammar and proper citations. Your answer should not be more than three (3) – 1 1/2 spaced pages, not including citations. Your citations should be endnotes or as part of your description as appropriate. Make sure you understand how a code or regulation section is cited. You could write many pages. However, I want you to distill the information so that it is concise, informative, and responsive to the question.

Your memorandum should demonstrate your knowledge of the event and the various effects. You should think critically so that you can describe your knowledge of partnership taxes and the basis of a partnership interest.

1. Define what a Technical Termination of a Partnership is.
2. Describe what occurs to the partnership before and after the technical termination.
3. Describe what occurs to the partners (or former partners) interests at the point of termination and after the technical termination.
4. What are the tax effects of a technical termination to the partnership?
5. What are the tax effects of a technical termination to the partners?
6. What is the effect on the partnerships accounting method, fiscal year end, depreciation methods, and existing tax elections?
7. What happens to the basis of the partnership interest of the partners who remain?