#partnerships
Partnerships
Partnership accounting, profit sharing, and financial management
MLP K-1 Tax Issues for Individual Investors: UBTI, Section 751 Recapture, and Multi-State Filings
A Master Limited Partnership pays cash quarterly but issues a Schedule K-1, not a 1099. Most distributions reduce your cost basis instead of being taxed, holding units in an IRA can trigger UBTI and a Form 990-T once income exceeds $1,000, and selling converts depreciation into ordinary income under Section 751 — taxed up to 37%.
MLP K-1 Tax Issues: UBTI, Section 751, and Multi-State Filings for Individual Investors
How individual MLP investors actually owe tax — UBTI on IRA-held units crosses the $1,000 Form 990-T threshold faster than expected, Section 751 reclassifies part of any sale gain as ordinary income, and the K-1's state schedule can force nonresident filings in operating states. Includes practical thresholds and basis-tracking rules.
Setting Up Owner's Equity Accounts: Tracking Contributions, Draws, and Retained Earnings the Right Way
Owner's equity is Assets minus Liabilities — the running total of contributions, draws, profit, and losses. This guide structures equity accounts for sole proprietors, partnerships, and LLCs, explains why draws are not expenses, and shows the year-end closing entries that keep a balance sheet in balance.
Section 707 Disguised Sale Rules: When a Partnership Contribution Becomes a Taxable Sale
A disguised sale under Section 707(a)(2)(B) collapses a partnership contribution and a related cash distribution into a taxable sale. Transfers within two years are presumed a sale; the deemed-sale fraction equals consideration received divided by property FMV.
Section 707(a)(2)(B) Disguised Sale Rules: How LLC Members Contribute Property and Take Cash Without Triggering a Taxable Sale
Section 707(a)(2)(B) recharacterizes paired property contributions and cash distributions to LLC members as taxable sales when they occur within two years. A walkthrough of the two-prong test, the rebuttable two-year presumption, the four regulatory exceptions, debt-financed distribution mechanics, and the Form 8275 disclosure that keeps partners out of audit trouble.
The PTET SALT Cap Workaround: How Pass-Through Owners Convert State Tax Into a Federal Deduction
How partnerships and S corporations in 36+ states use the Pass-Through Entity Tax election under IRS Notice 2020-75 to deduct state income tax at the entity level and bypass the federal SALT cap — with a worked example, resident-credit mechanics, and 2026 election deadlines.
Schedule B-1 of Form 1065: Disclosing 50% Owners in Tiered Partnerships, Family LLCs, and Private Equity Funds
Schedule B-1 of Form 1065 uses Section 267(c) attribution — not Section 318 — to identify partners who own 50% or more of profit, loss, or capital. A practical guide for tiered partnerships, family holding LLCs, and private equity fund structures.
Section 1446(f) Withholding: A Buyer's Guide to the 10% Trap on Foreign Partner Sales of Partnership Interests
Section 1446(f) requires buyers of partnership interests to withhold 10% of the amount realized when a foreign partner sells and remit it to the IRS within 20 days on Form 8288. This guide walks through the six exceptions, the certifications that must be in hand before closing, and the bookkeeping records that defend the position under audit.
Section 163(j) Interest Expense Limitation: 30% ATI, the Small Business Exemption, and the Real Property Trade Election
Section 163(j) caps the business interest deduction at 30% of adjusted taxable income, and OBBBA restored the EBITDA-style add-back for tax years beginning after December 31, 2024. This guide walks through the calculation, the small business exemption under Section 448(c), the irrevocable real property trade or business election, the partnership EBIE basis trap, and the Form 8990 reporting choreography.
Section 195 and Section 248: The First $5,000 Every Founder Can Deduct
Section 195 and Section 248 let founders deduct the first $5,000 of startup costs and the first $5,000 of organizational costs in year one, with the remainder amortized over 180 months. A guide to the $50,000 phase-out, the deemed election, and the mistakes that forfeit the deduction for LLCs, partnerships, and corporations.
The NYC Tax Most Freelancers Don't Know Exists Until They Owe It
New York City's 4 percent Unincorporated Business Tax applies to freelancers, consultants, and partnerships with NYC gross receipts above $95,000. A full credit eliminates the tax at $95,000 or less of taxable income, while an S-corp election can move higher earners out of the regime entirely.
Form 8308 and Section 751 Hot Assets: How a Partnership Sale Turns Capital Gain Into Ordinary Income
When a partner sells an LLC or partnership interest, Section 751 can recharacterize a large share of the gain as ordinary income taxed up to 37 percent. Form 8308 is the partnership's required disclosure of that hot-asset gain on Form 1065, with a January 31 furnishing leg and a return-due-date filing leg in 2026.