Tax Memorandum (Partnership Income)

Memorandum DATE: February 4, 2011 TO: Callaway Real Estate Limited alliance FROM: Chia Blais RE: 2010 taxable Income FACTS: Callaway was formed in January 1st 2010 with the purpose of purchasing, constructing, and managing residential solid estate. On February 2, 2010, Callaway purchased an apartment complex for $5,000,000 with a recourse owe of $4,500,000. The allocation for depreciation on the twist is $4,000,000 allowing $145,455 annually. tambour properties is a 5% corporate general checkmate, the pressure agreement provides that they (Tambour) testament manage and supply all the hold up essential to the exertion of the fusions real estate. Tambour will generate an annual concern fee equal to 5% of the rank rental income make by the federation. Dr. Samantha Ashin is a hold in partner that contributed land with a basis of $125,000 and a median(a) market value of $275,000 for a 38% interest in the partnership. The partnership agreement states tha t limited partners cannot be called upon to make supernumerary capital contributions in the future. The partnership agreement also contains a qualified income offset to run into the alternate test for sparing effect. ISSUES: 1.

Is Tambour Properties acting in capacity as a partner or non partner and is the payment to Tambour Properties for focusing services considered distributive sh ars of the partnership or guaranteed payments. 2. What is the taxable operational freeing and allocation to Callaway LP and Tambour Properties. 3. What is the taxable operating loss and allocation to Dr. Ashin that is allowable afterward limitati! on of loss rules are recognized. CONCLUSIONS: 1. Tambour Properties is performing on going services that are integral to the business and acting in capacity as a partner. The payments received by Tambour are guaranteed payments under section 707(c). The compensation for services is payable without regard to the partnership income. 2. The...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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