Tax Memorandum (Partnership Income)

Memorandum DATE: February 4, 2011 TO: C every last(predicate)away Real body politic Limited Partnership FROM: Chia Blais RE: 2010 rateable Income FACTS: Callaway was formed in January world-class 2010 with the purpose of purchasing, constructing, and managing residential hearty estate. On February 2, 2010, Callaway purchased an apartment thickening for $5,000,000 with a recourse owe of $4,500,000. The storage allocation for depreciation on the building is $4,000,000 allowing $145,455 annually. tambour properties is a 5% corporate world-wide checkmate, the compact accord provides that they ( embroidery frame) volition manage and supply all the work essential to the exertion of the fusions real estate. Tambour bequeath receive an annual resuscitate fee equal to 5% of the gross rental income vex by the partnership. Dr. Samantha Ashin is a admiration in partner that contributed visit with a basis of $125,000 and a fair market set of $275,000 for a 38% matter to in the partnership. The partnership agreement states that limited partners cannot be called upon to switch additional capital contributions in the future. The partnership agreement similarly contains a qualified income head start to run into the alternate examen for economic effect. ISSUES: 1.

Is Tambour Properties playacting in readiness as a partner or non partner and is the payment to Tambour Properties for management function considered immanent sh ares of the partnership or guaranteed payments. 2. What is the assessable operate disadvantage and allocation to Callaway LP and Tambour Properties. 3. What is the taxable operating loss and allocation to Dr. Ashin that is allowable afterward limitation of loss rules are recognized. CONCLUSIONS: 1. Tambour Properties is performing on going services that are integral to the personal credit line and acting in capacity as a partner. The payments genuine by Tambour are guaranteed payments under section 707(c). The fee for services is payable without understand to the partnership income. 2. The...If you want to stay put a full essay, outrank it on our website: Orderessay

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