Partnership Taxation Issues in Estate Planning

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Partnership Taxation Issuesin Estate Planning
By Carol A. Cantrell Houston, Texas
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Top 7 Issues with Partnerships in an Estate or
Trust

• IRD of a Deceased Partner
• Section 754 Elections
• Jobs Act Mandatory Negative Basis Adjustments
• Distributions of Marketable Securities
• Determining Trust Income from a Partnership
• Allocating Taxes on Partnership K-1 Income
• Partnership K-1 Capital Gains and DNI

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IRD for S Corporations

• 1367(b)(4) IRD of a deceased S corporation
  shareholder applies with respect to any item of
  income in the same manner as if the decedent had
  directly held his pro rata share of each item.
  (added in 1996).

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Income in Respect of a Deceased Partner

• 691(e) For application of this section to IRD
  of a deceased partner, see 753.
• 753 The amount includible in gross income of
  a successor in interest of a deceased partner
  under 736(a) is IRD under 691.

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736(a) Payments are IRD

• 736(a) - all payments from an ongoing
  partnership in liquidation of a deceased or
  retired partners interest except 736(b)
  payments.
• 736(b) payments for a partners interest in
  partnership property except a general partners
  share of cash basis accounts receivable and
  unstated goodwill in a service partnership.

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Dads Inside and Outside Basis
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Mandatory Negative Basis Adjustment under
734(b)
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Distribution ofMarketable Securities
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Gain on Distribution ofMarketable Securities
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With a 754 Election
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With a 754 Election
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