Related Transactions

[Terry D EA]

FYI _ Here is a link to a website that explains related party transactions, what/who is a related party very well. This site helped me understand the relationship between a partnership and corp that has the same owners.

http://www.law.cornell.edu/uscode/text/26/267

[jainen]

>>what/who is a related party<<

Thanks for posting this. With business entities I can never remember what is and isn't related. But all of us should memorize paragraph c4, defining "family member." Note who is NOT listed. In-laws, step-children, cousins, nieces.... lots of close relations!

This applies to below-market rent, Section 1031, family loans, capital and passive activity losses, and many other matters on the 1040. But not everything. For example, much broader definitions for dependents and for transferring education plans.

Also note that this is a TAX rule, not an accounting rule. GAAP generally ignores related party issues, requiring basis and other adjustments when books have to be reconciled to the tax return on Schedule M-1.

[Terry D EA]

<<<<I can never remember what is and isn't related.>>>> I am with you totally here. Matter of fact, I bookmarked this site. I also agree this is a tax rule.

[artp]

FYI _ Here is a link to a website that explains related party transactions, what/who is a related party very well. This site helped me understand the relationship between a partnership and corp that has the same owners.

http://www.law.cornell.edu/uscode/text/26/267

In the past I have used the BNA portfolio 564 which has excellent coverage on this topic and lays out the relationships in a straightforward manner...just rather expensive at $400.

[Terry D EA]

I had a trial with BNA and it was really good. But you are right it is pricey.