StudentShare solutions
Triangle menu

Summary of Section 754 - Research Paper Example

Not dowloaded yet

Extract of sample
Summary of Section 754

Hence, now the owners and managers who pay tax and their advisers now advance towards the transactions with the same concern, as those stated in the historic decrees of subchapter K that the partnerships concerned with tax have been asking for years: why incorporate The substantial increase in the use of partnerships has led to increasing frustration with the obsolete subchapter K regulations (most of which were spread in 1955). Among the most troublesome laws are those which govern the basis for adjustments on the sale or swap (exchange) of a partnership stake (Orbach, 2004). In fact, the laws --which allow the purchaser of a partnership stake to reflect the purchaser's acquiring cost in partnership resources, are among the most perplexed and highly defective aspects of partnership taxation.
At the start of the year 1998, to address these problems, the Internal Revenue Service in collaboration with the Treasury issued proposed laws and policies u/s734(b) (basis adjustments on some distributions), section743(b) (basis adjustments on transfers of partnership interests),section 751(a) (the "collapsible partnership rule" requiring recognition of ordinary income on the disposition of certain partnership interests), andsection754 (Depreciation Adjustment). (Internal Revenue Code)
The origin of partnership property is usually not affected when a partner sells or exchanges its interest in the business. As a result, if a person buys or ventures into a partnership stake or interest by sale or exchange for a sum that exceeds the transferee's allocation of the adjusted basis of partnership property, the purchase price in excess, is not reflected in the partnership's asset basis, i.e., the purchaser is not able to "push down" its purchase price to the partnership's assets When the business (partnership) makes a an election u/s754 within the stipulated time, however, a transferee partner's share of the partnership's adjusted basis in its assets ("inside basis") is stepped up or stepped down to reflect the partner's basis in the acquired business interest ("outside basis").
Bottom of Form
We would proceed by considering an example, in relation to the partnership business, the various transactions that take place in the form of sale and exchange. More importantly, we would focus on the implications of Section 754 of the IRS, which has a major impact with respect to taxation in shaping up these transactions (Orbach, 2004). When an interested party, buys a stake or share of an existing partner's partnership interest, or the interest of a member of a limited liability corporation (LLC) taxed as a partnership, at a value which is said to be its fair value in the market the amount that the purchaser of the interest pays becomes the base for the purchaser's business interest (outside basis). In this transaction at fair market value, the buyer (new partner) assumes the seller's pro rata share of the business partnership's adjusted basis in its assets (inside basis). If the partnership's property or asset value has appreciated sufficiently, the variation between the new partner's inside and outside basis can be ...Show more

Summary

A vast majority of businesses were planned and organized as partnerships, more than a decade ago. A large number of these businesses were in the real estate sector and many were professional service firms. The taxation of these businesses, organized in partnerships, was not a major issue, hence gained lesser attention from the lawmakers and tax managers alike…
Author : nina86
Summary of Section 754 essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the research paper on your topic
"Summary of Section 754"
with a personal 20% discount.
Grab the best paper

Related Essays

Summary
One prominent area of consideration is what is referred to as designer personalities. Broadly speaking, designer personalities are understood as personalities that are pharmaceutically altered to achieve optimal success and happiness. This essay examines what is meant by the term "designer personality," considers the ways we have of creating this today, and the advantages and disadvantages.
6 pages (1500 words) Research Paper
Wall Street Journal Section Review
At first glance, the screen dumps would provide information on the most enticing headlines for the day, followed by subheadings of relevant news items within the above mentioned categories. On the right column, the subheadings present issues such as The Most Popular in Personal Finance, Most Popular in Asia (if the Asian Edition is chosen), a Follow Personal Finance News option in RSS or Twitter, Personal Finance Video, Market Data Center, Personal Finance How-To Guides, Cyrstal Ball, Consumer Interest Rates, Financial Adviser, among others.
2 pages (500 words) Research Paper
Section 121 gain and losses
The agency was founded in 1862 by the late President Lincoln who was operating under the US Department of Treasury Act. The agent is mainly involved in the entire process of collecting both the employment taxes and also the individual income taxes. It is also in charge of handling of the gifts, cooperates, estate taxes and finally excise taxes.
6 pages (1500 words) Research Paper
Wall Street Journal Section Review
On the right column, the subheadings present issues such as The Most Popular in Personal Finance, Most Popular in Asia (if the Asian Edition is
2 pages (500 words) Research Paper
RESULTS AND DISSCUSSION SECTION
In order to obtain effective data to enhance discussions and making conclusions, the study interviewed juniors, seniors, freshmen, and sophomores. From the findings it
6 pages (1500 words) Research Paper
Summary
A perfect information system enables reliable communication between a company, the supplier’s manufactures and marketers as if they were all in one organization. It assists people to come
1 pages (250 words) Research Paper
Summary
But all of that changed when he became a highly influential NRA lobbyist who successfully removed most of the roadblocks that existed for people who
1 pages (250 words) Research Paper
Summary
Nike believes that providing the best markets itself (Panos). In as much as Nike sells products which are 15 percent more than the normal market value for such shoes, it has its own market niche which adores them. In the past, Nike had invested greatly in advertisements
1 pages (250 words) Research Paper
General discussion section
In addition, it has been challenging to come up with reliable indicators of fraudulent claims activity due to a dearth of empirical evidence covering
10 pages (2500 words) Research Paper
Business Plan - Marketing Section
It then develops a strong value proposition for the company and shows how it can improve its bottom line and make customers understand why they should buy its products. It finally introduces the pricing strategy
1 pages (250 words) Research Paper
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation