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Nonliquidating distribution

(However, a partner's deduction for his or her distributive share of a loss may be limited.See Limits on Losses, later.) These items are reported to the partner on Schedule K-1 (Form 1065).For its tax year ended December 31, the partnership had a loss of

(However, a partner's deduction for his or her distributive share of a loss may be limited.See Limits on Losses, later.) These items are reported to the partner on Schedule K-1 (Form 1065).For its tax year ended December 31, the partnership had a loss of $1,200.This loss occurred equally over the partnership's tax year.If the partnership agreement does not provide for an allocation, or an allocation does not have substantial economic effect, the partner's distributive share of the partnership items is generally determined by the partner's interest in the partnership.For special allocation rules for items attributable to built-in gain or loss on property contributed by a partner, see Contribution of Property under Transactions Between Partnership and Partners, later. An allocation has substantial economic effect if both of the following tests are met.For this purpose, partnership income for the partnership's tax year in which a partner dies is considered to be earned equally in each month. Larry, a partner in Woods Par, is a calendar year taxpayer. For the partnership year ending June 30, 2001, Larry's distributive share of partnership profits is $2,000.

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(However, a partner's deduction for his or her distributive share of a loss may be limited.

See Limits on Losses, later.) These items are reported to the partner on Schedule K-1 (Form 1065).

For its tax year ended December 31, the partnership had a loss of $1,200.

This loss occurred equally over the partnership's tax year.

,200.This loss occurred equally over the partnership's tax year.If the partnership agreement does not provide for an allocation, or an allocation does not have substantial economic effect, the partner's distributive share of the partnership items is generally determined by the partner's interest in the partnership.For special allocation rules for items attributable to built-in gain or loss on property contributed by a partner, see Contribution of Property under Transactions Between Partnership and Partners, later. An allocation has substantial economic effect if both of the following tests are met.For this purpose, partnership income for the partnership's tax year in which a partner dies is considered to be earned equally in each month. Larry, a partner in Woods Par, is a calendar year taxpayer. For the partnership year ending June 30, 2001, Larry's distributive share of partnership profits is ,000.

For more information on self-employment tax, see Publication 533. To figure alternative minimum tax, a partner must separately take into account any distributive share of items of income and deductions that enter into the computation of alternative minimum taxable income.

The loss is divided among the partners as follows: Certain cash basis items prorated daily.

If any partner's interest in a partnership changes during the tax year, each partner's share of certain cash basis items of the partnership must be determined by prorating the items on a daily basis.

A partner's income or loss from a partnership is the partner's distributive share of partnership items for the partnership's tax year that ends with or within the partner's tax year.

These items are reported to the partner on Schedule K-1 (Form 1065). When it is necessary to determine the gross income of a partner, the partner's gross income includes his or her distributive share of the partnership's gross income.

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Nonliquidating distribution introduction

Nonliquidating distribution