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Entities Question: Visit Washington, DC official Web site and review the information there related to forming and operating business entities. Write a short report explaining the steps for organizing a business in Washington, DC and summarizing any tax-related information you found.
Partnership Question (Answer all of the following questions):
1. What is a flow through entity and how is it taxed?
2. What specific economic rights or entitlements are included with a partnership interest?
3. What is “inside basis” and “outside basis” and why are they relevant in partnership taxation?
4. What is “recourse debt” and “nonrecourse debt” and how are they generally allocated to partners?
5. How does a partnership determine its accounting period (i.e., year end) and method (i.e., can it be cash basis or does it have to be accrual basis)?
6. How does a partnership calculate and characterize it’s ordinary business income and separately stated items?
7. How is a partner’s share of partnership income reported to the partners? If a partnership has losses, how do the (1) basis, (2) at-risk, and (3) passive activity loss limits apply to partners?
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