Admitting new partners requires adjustments, but also provides planning opportunities

Article Abstract:

Admitting a new partner to a partnership may force the partnership to change its techniques for allocating losses, gains, and income. Reallocations can become especially difficult for partnerships with cash-basis items and partnerships with appreciated property which is revalued when a new partner is admitted. Other important items relating to partnership admission to consider include: allocating basis adjustments; contributing cash; and accounting for the death of a partner.

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Special election avoids gain on transferred partnership property from being taxed twice

Article Abstract:

The Section 754 election deals with transfer of property and partnership interest. There can either be an increase or decrease in basis for the transferee or the partnership. The election must be filed in a timely manner and only used for appropriate situations. Other relevant information includes the basis for adjusting, interest transfer process, and the distribution of property.

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