PARTNERSHIP AND SUBCHAPTER S TAX OUTLINE
SPRING 2009
VICE PRESIDENT, ASSOCIATE DEAN, AND PROFESSOR BRUCE A. MCGOVERN
Stephen A. Lind et al, Fundamentals of Partnership Taxation: Cases and Materials (8th ed. 2008)
Selected Federal Taxation Statutes and Regulations (Daniel J. Lathrope ed., 2009 ed. 2008)
Laura E. Cunningham & Noël B. Cunningham, The Logic of Subchapter K: A Conceptual Guide to the Taxation of Partnerships (3d ed. 2006)

PART 1: AN OVERVIEW OF THE TAXATION OF PARTNERSHIPS AND PARTNERS 3 I. Introduction to Subchapter K 3 II. Tax Classification of Business Enterprises 3 a. In General 3 b. Corporations and Partnerships 3 i. “Check-the-Box” Regulations 3 ii. Existence of a Separate Entity for Federal Tax Purposes 4 iii. Publicly Traded Partnerships 6 c. Trusts 6 d. Tax Policy Considerations 6 III. Introduction to Choice of Business Entity 7

PART 2: FORMATION OF A PARTNERSHIP 8 I. Contributions of Property 8 a. General Rules 8 b. Introduction to Partnership Accounting 11 II. Treatment of Liabilities: The Basics 15 a. Impact of Liabilities on Partner’s Outside Basis 15 b. Contributions of Encumbered Property 16 III. Contributions of Services 23 a. Introduction 23 b. Receipt of Capital Interest for Services 24 c. Receipt of a Profits Interest for Services 30 i. Current Law 30 ii. Proposed Regulations 31 IV. Organization and Syndication Expenses 32

PART 3: OPERATIONS OF A PARTNERSHIP: GENERAL RULES 34 I. Tax Consequences to the Partnership: Aggregate and Entity Principles 34 a. The Partnership as an Entity 34 b. The Taxable Year 34 II. Tax Consequences to the Partners 37 a. General Rules 37 b. Electing Large Partnerships 41 III. Limitations on Partnership Losses 41 a. Basis Limitations 41 b. At-Risk Limitations 42