Chapter 1 1-1 Overview: Basic Tax Structure of Partnerships and LLCs 1-1 What is a partnership for federal income tax purposes? 1-2 Partnerships versus other entities 1-3 Electing to be taxed as a partnership: The "check-the-box" rules 1-11 Overview of the basic framework of partnership taxation 1-14 Partnership operations 1-16 Chapter 2 2-1 Tax Consequences of Partnership or LLC Formation 2-1 Determination of basis 2-2 Effect of entity operations 2-3 Effect of liabilities 2-4 Partnership interests obtained for services 2-11 Transfer of a capital interest 2-13 Transfer of a profits interest 2-17 Campbell 2-20 Lessons for tax advisers 2-22 Chapter 3 3-1 Partnership Distributions 3-1 Introduction 3-2 Liquidating distributions: Proportionate 3-11 Sale of distributed property 3-15 Section 736: Death or retirement of a partner from professional services partnerships or LLCs 3-16 Chapter 4 4-1 Compensatory Payments to Partners 4-1 Introduction 4-2 Self-employment income of partners 4-15 Proposed regulations concerning limited partners' self-employment income 4-17 Chapter 5 5-1 At-Risk and Passive Activity Limits 5-1 Overview 5-2 Basis and at-risk limitations 5-7 Gross income from passive activities 5-14 Passive activity deductions 5-17 Who is subject to the passive loss limitations? 5-18 What are passive activities? 5-19 Rules of application 5-29 Grouping activities 5-34 Chapter 6 6-1 Overview of Profit and Loss Allocations: General Rules and Restrictions 6-1 Introduction 6-2 Section 704(b): Allocations must have "substantial economic effect" 6-3 Allocations with respect to contributed property: Section 704(c)(1)(A) 6-15 Chapter 7 7-1 Reporting Taxable Income for Partnerships and LLCs 7-1 Overview: Partnership tax return 7-2 General tax payment and reporting scheme 7-9 Form 1065: Income 7-14 Form 1065: Expenses 7-18 Schedules K and K-1 7-26 Interpreting Schedule K-1 7-38 Appendix A A-1 Sample Partnership Tax Return A-1 Facts and financial data A-3 Glossary Glossary 1 Index Index 1 Solutions Solutions 1 Chapter 1 Solutions 1 Chapter 2 Solutions 3 Chapter 3 Solutions 4 Chapter 4 Solutions 5 Chapter 5 Solutions 7 Chapter 6 Solutions 8 Chapter 7 Solutions 10.