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Discussion Forum Index --> Advanced Tax Questions --> Basis of partnership as gift
Discussion Forum Index --> Tax Questions --> Basis of partnership as gift
Hadlin (talk|edits) said:
| 13 December 2007
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| When two people form a partnership the equity contributed does not need to equal their ownership percentage. Now say father and son want to open real estate partnership. Father contributes property , Son is supposed to run/manage property. How do you figure the gift implications? Son now owns 50% of property with substantial value.
Thanks,
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BethAZ (talk|edits) said:
| 14 December 2007
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| How about an independent appraisal?
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Hadlin (talk|edits) said:
| 14 December 2007
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| I guess my question is more about if this is a gift. Would it matter if they weren't related.
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GrizzlyCPA (talk|edits) said:
| 14 December 2007
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| Why not simply have the father as being a 100% capital partner with the son owning a percentage of the income and loss? The father could gift the son a percentage of the capital up to $12,000 each year. This would avoid gift taxes. An appraisal should be done yearly though.
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Hadlin (talk|edits) said:
| 14 December 2007
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| is the son owning a percentage of the income and loss considered a gift?
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GrizzlyCPA (talk|edits) said:
| 14 December 2007
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| If the son contributes no property to the partnership or services before the partnership begins it would be a gift. If only the son works for the partnership, make sure he receives guarranteed payments.
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Hadlin (talk|edits) said:
| 17 December 2007
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| how would you value the income interest?
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Dennis (talk|edits) said:
| 17 December 2007
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| If you are treating half the real property as a gift there is no need to separately value the income interest. If you are not, income to the son would be guaranteed payments. Gift of just the income stream to avoid guaranteed payments would be a transfer with retained interest.
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