In the meantime, partnerships and their partners must work with current distribution rules in efforts to minimize NII tax exposure when possible.Please contact our offices if you have any concerns over how these rules might affect your overall 2014 tax liability.731 as gain from a sale or exchange of a partnership interest.
The basic paradigm upon which Subchapter K is best described as ; that is, that a partnership should be all but invisible to the taxing system.
NII includes net gains from the sale of property, unless the property is held in a non-passive trade or business.
If the property sold is a non-passive interest in a partnership or S corporation, gain from the sale of the interest is NII only to the extent that income from a deemed sale of the entity’s property would be NII.
NII basics There are three general categories of NII.
In addition to gross income from portfolio items such as interest, rents and dividends that are not earned in a trade or business (Category 1), NII includes gross income from a trade or business that is a passive activity, as determined under Code Sec.