MGT 135 Lecture Notes - Lecture 12: Geostationary Operational Environmental Satellite, Ordinary Income, S Corporation

• School: UCSD
• Department: Management, Rady School of
• Course: MGT 135
• Professor: John Anderson

Document Summary

Partnerships, continued: adjusting the basis of a partnership. After a year of operating, partner receives a schedule k -1, showing what we call the allocated share of income. Rule: if partnership income is positive, this increases the basis; if the partnership income is negative, this decreases the basis; (concept of a cash distribution. What if it"s a corporation and it"s a distribution, its called a dividend and it"s taxable. the moment a partnership becomes a corporation, if the owner receives a cash in the form of a dividen, it"s gonna be taxable. Let"s say the business entity is at the partnership level, and the partner is eonly entitled to withdraw cash to the partner. Does the partner pay tax on that cash distribution. What is taxable to the partner is the distributive shares of income. A cash distribution to the partner would not be considered income. If the partnership is earning income, they"re gonna pay tax on it anyway.