Chap. 21 #1,2,3,5,6,7,10,11,13Tim Lee1. An association formed by two or more persons to carry on a trade or business, with each contributing money, property, labor, or skill Includes a syndicate, group, pool, joint venture, or other unincorporated organization through which any business, financial operation or venture is carried on2. An explanation of rights and obligations of the partners, including the allocation of income, deductions, and cash flows, initial and future capital contribution requirements, conditions for terminating the partnership3. General partnerships are not limited and the owners are considered partnersLLCs have the corporate benefit of limited liability for the owners with the benefits of partnership taxation. Owners are considered to be members rather than members5. Items that are taken into account separately and have a separate flow-through to the partners. A partnership combines income and expenses related to the partnerships trade or business activities into a single income or loss amount that is passed through to the partners6. inside basis refers to the partnerships adjusted tax basis for each asset it ownsoutside basis represents each partners basis in the partnership interest7. A partnership must file form 1065, due on the 15th day of the 4th month followed the end of the tax year. The partnership return includes a schedule K-1 for each partner that shows the partners share of partnership items. The partnership makes most elections regarding the treatment of partnership items, but no tax is calculated or paid the with return.10. The value of the interest is taxable to the partner. 11. The partners outside basis in the partnership interest is the same as the partners basis in the contributed assets. The partnerships basis in the contributed assets equals the partners basis in the property prior to its transfer of ownership13. The partnership steps into the shoes of the partner and continues the same cost recovery calculations. If additional costs are incurred, the additional basis is treated as a new MACRS asset, placed in service on the date the cost is incurred.