by Turquoise Tax Systems | Jun 17, 2026 | Business Tax
Certain partnership assets produce ordinary income when sold or exchanged. These assets are known as hot assets and include unrealized receivables and inventory. When a partner sells a partnership interest, receives certain retirement payments, or receives a...
by Turquoise Tax Systems | Jun 17, 2026 | Business Tax
A partner’s outside basis is the tax basis in their partnership interest. It begins with the adjusted basis of contributed property plus cash and includes the partner’s share of partnership liabilities. Outside basis determines loss limits, distribution treatment, and...
by Turquoise Tax Systems | Jun 17, 2026 | Business Tax
Partnerships are flow‑through entities, but certain transactions between a partnership and a partner are treated as if the partner were not a partner. These rules prevent partners from disguising sales, wages, or exchanges as partnership allocations. When a partner is...
by Turquoise Tax Systems | Jun 17, 2026 | Business Tax
Form 1065 is the information return used by partnerships to report income, deductions, credits, and other tax items. A partnership is a flow‑through entity under IRC §701, meaning the partnership itself does not pay income tax. Instead, all items pass through to the...
by Turquoise Tax Systems | Jun 17, 2026 | Business Tax
A partnership exists when two or more persons carry on a trade or business and share profits, losses, and responsibilities. For federal tax purposes, the definition is broader than the legal definition: under IRC §761, a partnership includes syndicates, groups, pools,...
by Turquoise Tax Systems | Jun 17, 2026 | Business Tax
An S corporation is a domestic corporation that elects to be taxed as a pass‑through entity. Under IRC §1363, the S corporation generally pays no federal income tax. Instead, income, deductions, credits, and other items flow through to shareholders, who report them on...
