Partnership Tax (J.D.)
M 9-10:50 a.m., Tues. 10-10:50 a.m.; Room 355A
Spring 2015 Syllabus
Prof. Charlene Luke
Office phone: 352-273-0658
lukec@law.ufl.edu
Office #: 326 Holland Hall
Office hours: M & Tues: 11:00 a.m.- noon (or by appointment)
Course Description:
This course is an introduction to the federal income taxation of subchapter K
entities and their owners. Multi-owner, unincorporated business entities are generally
taxed as subchapter K entities. Thus, subchapter K entities include not only general
partnerships but also multi-member LLCs.
Course Objectives:
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Learn a selection of federal income taxation rules relating to multi-owner,
unincorporated business enterprises.
Improve ability to interpret and apply tax statutes and regulations.
Establish a base from which to acquire further tax expertise.
Course Prerequisite:
You should have taken Income Taxation prior to taking this course. If you find
that you need to review basic income tax principles, I recommend Understanding
Federal Income Taxation (4th ed.) by J. Martin Burke & Michael K. Friel.
Methodology & Course Materials:
The course will be taught primarily through problem-solving and lecture.
Students are expected to participate in class (see “Evaluation & Requirements” below).
A slideshow review of the key concepts discussed during class will be made available
through TWEN at the end of each course segment; in general, class time will not be used
to review the slides. You are required to register for this class on TWEN; please let me
know if you have any difficulty in doing so.
The primary books for this class are McDaniel, McMahon & Simmons, Federal
Income Taxation of Partnerships and S Corporations (5th ed.) and the related problem
book. I may distribute additional reading and handouts through TWEN. You are also
required to study various provisions of the Internal Revenue Code and Treasury
regulations. While these statutes and regulations are available online, I recommend
bringing a hard copy of the statutes and related regulations to class: Bank and Stark's
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Selected Sections: Corporate and Partnership Income Tax Code and Regulations, 20142015.
If you wish to consult a supplementary book on partnership tax, I highly
recommend The Logic of Subchapter K (4th ed.) by Laura Cunningham and Noël
Cunningham.
Evaluation & Class Attendance Policy:
Grade:
10 percent: Participation
90 percent: Final Exam
Class Participation & Attendance:
You are expected to attend class and to be prepared to respond to questions;
attendance will be taken each day. Repeated lack of preparedness may be counted as one
or more absences. Class disruption (e.g., cell phone noise, texting, internet surfing,
arriving late, leaving early) may be counted as one or more absences. You will be
notified each time you accrue an absence on account of disruptive behavior and/or lack of
preparation.
Absences taken for observance of religious holidays will be excused. If you are
planning to miss class for a religious holiday, please let me know. If you are absent
because of a special situation (sickness, family emergency, job interview, etc.), the
absence may be excused at my discretion after you have provided adequate
documentation of the situation and you have completed a make-up assignment. If
you are dealing with a personal situation of high difficulty and prolonged duration, please
seek assistance from me and/or the Student Affairs Office as soon as possible. Avenues
for obtaining help as to various types of concerns are listed at the website
http://www.law.ufl.edu/student-affairs/additional-information/have-a-problem-we-canhelp.
If you have more than four unexcused absences from regularly scheduled
classes, your participation grade will be 0, and you may be barred from taking the
final exam.
Final Exam:
The final exam will be three hours and will be given during the time scheduled by
the law school (currently scheduled for Tues., Apr. 28, 2015, at 1:00 p.m.). The exam
will test your knowledge of the assigned reading and the related class discussion. The
exam will be completely open book. You may not, however, consult materials via a
computer or other electronic device. ExamSoft will be required if you wish to type
your answers on computer. You may bring a basic calculator to the exam but it must not
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be associated with a device with wireless communication capabilities (i.e., calculator may
not be a smartphone or tablet app).
The law school policy on delay in taking exams can be found at:
http://www.law.ufl.edu/student-affairs/current-students/academic-policies#12.
Grade Scale & Grading Policies:
Grade
A (Excellent)
AB+
B (Good)
BC+
C (Satisfactory)
CD+
D (Poor)
DE (Failure)
Points
4.0
3.67
3.33
3.00
2.67
2.33
2.00
1.67
1.33
1.00
0.67
0.00
The law school grading policy is available at: http://www.law.ufl.edu/studentaffairs/current-students/academic-policies#9.
Outline of Topics and Class Assignments:
Class assignments are provided at the end of this syllabus. The schedule may be
revised to reflect the pace of class discussion and/or any new legal developments. For the
first class meeting, read pages 1-40 of the text book and complete the section 2.A
problems on pages 1-2 of the problem book. Unless otherwise advised, you should
assume that four problems will be covered per class session, and you should prepare
accordingly.
Other Policies, including Statement on Disability Accommodation:
Additional law school and university policies may be found at (1)
http://www.law.ufl.edu/student-affairs/current-students/academic-policies (academic
policies) and (2) http://www.law.ufl.edu/student-affairs/additional-information/honorcode-and-committee (honor code).
Students can provide feedback on the quality of instruction in this course by
completing online evaluations at https://evaluations.ufl.edu. Evaluations are typically
open during the last two or three weeks of the semester, but students will receive notice
of the specific times when they are open. Summary results of these assessments are
available to students at https://evaluations.ufl.edu/results/.
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Students requesting classroom accommodation must first register with the Office
of Disability Resources. The UF Office of Disability Resources will provide
documentation to the student who must then provide this documentation to the Law
School Office of Student Affairs when requesting accommodation.
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Semester Reading & Problem Assignments
I. Introduction to Partnership Taxation
Reading: 1-40, 201-204
Problems: All Chapter 1 problems
II. Taxation of Partnership Taxable Income to the Partners
Reading: 84-110
Problems: All Chapter 3 problems
III. Formation of a Partnership: Contributions
Reading: 41-51 & 57-78
Problems: (1) Chapter 2, Section 1: All problems except omit problem
2(c)(3) (pg. 5).
(2) Chapter 2, Section 3.A: Complete all problems, but add to
problem 1(b) (pg. 9): “In determining the tax consequences to Charlie, assume that the
building plans have a fair market value of $200,000, and that he has $0 basis in them.
Also assume that he contributes the plans to the partnership instead of allowing the
partnership mere use.”
(3) Chapter 2, Section 3.B: Complete all problems but answer
problem 1(a) and problem 2 using the approach using only the proposed regulations.
IV. Recourse Liabilities
Reading: 205-217 & 51-56 (except only skim the material on nonrecourse
debt on page 55)
Problems: (1) Chapter 5, Section 1: Complete all problems. For all three
problems, assume that the partners have unconditionally agreed to restore a deficit capital
account balance at liquidation.
(2) Chapter 2, section 2: Complete problem 1(a) and problem 2.
For problem 1(a), assume that partnership formation is in Year 1 and the sale of
Greenacre followed by partnership liquidation is in Year 2.
V. Partners’ Distributive Shares: Substantial Economic Effect
Reading: 111-60
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Problems: Chapter 4, Section 2.A: Complete all problems. For problem
(1)(d) (pgs. 14) assume that the partnership sells both the building and land and
liquidates. For problem 3 (pg. 14), assume for (f)(2) variation that Brett contributes the
promissory note at the formation of the partnership rather than at the end of the 16th year.
VI. Partners’ Distributive Shares: Allocations as to Contributed Property
Reading: 172-190
Problems: Chapter 4, Section 3: Complete all problems. For Problem 3
(pg. 20), assume that Todd and Ursula initially contributed $300,000 of cash each, which
was used to purchase Greenacre. Assume for simplicity that Greenacre, including any
associated buildings, is entirely non-depreciable.
VII. Partner’s Distributive Shares: Allocations Where Interests Vary
Reading: 193-201
Problems: Chapter 4, Section 5: Complete all problems
VIII. Transactions between Partners and the Partnership
Reading: 230-266
Problems: Chapter 6: Complete all problems
IX. Sale of Partnership Interests by Partners
Reading: 297-338
Problems: (1) Chapter 8, Section 1: Complete all problems except omit
problem 5 (pgs. 34-35)
(2) Chapter 8, Section 2: Complete all problems
X. Current Distributions in Absence of Unrealized Receivables or Substantially
Appreciated Inventory
Reading: 339-359
Problems: Chapter 9, Section 1: Complete all problems except omit
problem 5 (pgs. 43-44). In completing these problems, assume that a partnership eligible
to revalue under Treas. Reg. § 1.704-1(b)(2)(iv)(f) always revalues.
XI. Liquidating Distributions & Complete Liquidations
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Reading: 374-54, 414-427 (but skim the two paragraphs discussing section
751(b) @422)
Problems: (1) Chapter 9, Section 3: Complete all problems
(2) Chapter 9, Section 6: Complete all problems. For problem
2 (pgs. 46-47) change the partnership’s business from real estate development to rental
real estate and change “Lots held for sale” in the partnership books to “Whiteacre,”
which is a § 1231 asset not subject to § 1245 recapture; finally, omit the final paragraph
of problem 2 (regarding the bulldozer).
Additional Topics (if time permits)
I. Nonrecourse Debt
II. Current Distributions for Partnership Holding Unrealized Receivables or
Substantially Appreciated Inventory
III. Basis Adjustment to Remaining Partnership Assets after Distribution
IV. Mixing Bowl Transactions
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