Article Abstract:
Echols versus Comm'r concerns abandonment of partnership interest and deductibility of losses incurred. In 1976, the value of a real estate limited partnership's property decreased to less than the balance of the nonrecourse debt it secured. The taxpayer, a partner, offered his partnership interest to other partners but the offer was not taken. The property was foreclosed in 1977. The taxpayer claimed a loss for 1976, however, the Tax Court ruled that the loss should be deducted in the year of foreclosure. The Fifth Circuit court reversed the ruling, stating that a partner can abandon a partnership and claim losses provided that abandonment is shown by overt acts.
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Article Abstract:
Unger versus Comm'r concerns the taxation of foreign investors in real estate limited partnerships. A Canadian resident invested in a real estate limited partnership in Boston, MA. He did not include his partnership profits in his tax return for 1984, claiming that pursuant to the entity theory of partnership taxation, he had no permanent establishment and merely held an interest in the partnership. The Internal Revenue Service (IRS), however, countered that under the aggregate theory, the partnership's office in Boston is deemed as its partners' permanent establishment. The District of Columbia Circuit Court upheld the aggregate theory reasoning of the IRS.
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Article Abstract:
A limited partnership's informational tax returns are organized by an information return preparer. There are cases when a preparer makes incorrect computations by overstating tax deductions and understating tax liabilities of limited partners' personal returns. In such cases, IRS regulations state that the preparer can be penalized for his negligence in computing limited partners' returns.
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