Partnership Definitions (3of3) Limited partnership One or more general partners and One of more limited partners >Cannot participate in management >)Cannot make commitments for partnership Liability generally limited to amount invested in partnership Electing large partnership(ELP Non-service partnerships w/2100 ptrs
6 Partnership Definitions (3 of 3) Limited partnership –One or more general partners and –One of more limited partners »Cannot participate in management »Cannot make commitments for partnership »Liability generally limited to amount invested in partnership Electing large partnership (ELP) –Non-service partnerships w/ 100 ptrs
Overview of Partnership Taxation Partnership profits and losses Partner's Basis Partnership distributions
7 Overview of Partnership Taxation Partnership profits and losses Partner’s Basis Partnership distributions
Partnership Profits and Losses (1 of 2) Partnership files Form 1065 Information return with no tax due Partners receive a form K-1 Reports partner's share of income or loss and separately reported items
8 Partnership Profits and Losses (1 of 2) Partnership files Form 1065 – Information return with no tax due Partners receive a Form K-1 –Reports partner’s share of income or loss and separately reported items
Partnership Profits and Losses (2 of 2) Partners include profit or loss and separate items on their individual return form 1040 Loss limitation Partner's losses limited to his/her basis in the partnership 9
9 Partnership Profits and Losses (2 of 2) Partners include profit or loss and separate items on their individual return Form 1040 Loss limitation –Partner’s losses limited to his/her basis in the partnership