Discussion:Deductibility of Limited Partner Share of Syndication Costs
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Discussion Forum Index --> Tax Questions --> Deductibility of Limited Partner Share of Syndication Costs
| 5 June 2008 | |
| Nondeductible cost. See Sec. 709(a). However, the syndication cost paid by the partnership is undoubtedly built into the partner's basis in his partnership interest, which can be used to increase/decrease his loss/gain on liquidation. | |
| 5 June 2008 | |
| Riley 2,
Thanks for the cite. I am a little confused as to how these syndication costs would be built into the partners basis assuming the Partnership followed accounting rules . These rules state that syndication costs are capitalized but cannot be depreciated or amortized. In the case of my client thats precisely what the Partnership did. They provided my client with a note attached to the final K-1 that states "the syndication costs have been presented as a reminder;they may be deductible this year . Please consult your tax advisor with respect to the appropriate treatment of this item " The syndication costs are a big number . I could obviously add them to partners orifinal purchase price but that would not be in harmony with Sec. code 709 (a ).I think my client's out of luck on this issue . | |
RoyDaleOne (talk|edits) said: | 6 June 2008 |
| Each partner individually claims his allocated share of the basis attributable to syndication costs as a capital loss on his/her individual income tax return. This individual tax treatment is governed by Internal Revenue Code Section 731(a)(2) which allows a capital loss when a partner has additional tax basis in a partnership after the partnership’s liquidating distribution of money to its partners. | |
| 7 June 2008 | |
| Agree with Roy. The syndication costs are not necessarily identified as such in the client's basis schedules.
Cotopop, you may need to reconstruct the client's partnership basis schedules, going back to the original investment (which undoubtedly went to the sydicators). | |
