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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28313
Experience:  Taxes, Immigration, Labor Relations
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What are the tax consequences of a member in a partnership

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What are the tax consequences of a member in a partnership contributing the use of office space to the partnership for an indefinite period of time.

Since the partner hasn't transferred ownership of the property, I assume this
would be a matter for the operating agreement and not count as a capital contribution?

LEV :

Hi and welcome to Just Answer!
Your understanding is correct - because the partner provided the "use" of the property - he/she might receive attributable part of the partnership income.
But partner's capital account will not be affected.

Customer:

Thanks, XXXXX XXXXX that's all that partner contributed their capital account would be zero?

Customer:

provided there were no profits for the year

LEV :

Yes - capital account will be zero. But distribution of profit or loss would be based on partnership agreement.
I suggest this document - http://www.irs.gov/Businesses/Partnerships/Partnership---Audit-Technique-Guide---Chapter-1---Basic-Principles-(Rev.-3-2008)

Customer:

and the item j capital line reflects the capital accounts?

LEV :

item J on which form?

Customer:

K-1 item j capital %

LEV :

Yes - capital account - as you see profit share and capital share could be different.

Customer:

ok, thanks

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