Key Takeaways: Liquidating distributions are generally tax-free up to partner’s basis Gain recognized only when cash/marketable securities exceed basis Loss recognized only on liquidating distributions of money, receivables,

Key Takeaways: Section 754 allows optional basis adjustments for partnership assets Triggered by: Transfer of partnership interest OR distribution of property Section 743(b): Adjusts basis when partnership interest

Key Takeaways: Partners are self-employed, not employees. No W-2 wages for partners. SE tax rate: 15.3% (12.4% Social Security + 2.9% Medicare) Additional 0.9% Medicare above $200,000 (single) or $250,000

Key Takeaways: Guaranteed payments are for services or capital, regardless of partnership income Taxed as ordinary income to the receiving partner Subject to self-employment tax (including limited partners

Key Takeaways: Inside basis: Partnership’s basis in its assets Outside basis: Partner’s basis in their partnership interest Outside basis determines deductible losses and tax-free distributions Basis can never

Key Takeaways: Schedule K-1 reports each partner’s share of partnership income, deductions, and credits Partners receive K-1 by the Form 1065 due date (March 17, 2026 for calendar-year