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CCH Axcess Tax

Transfer of Partner Interest and Capital

Use the sections in this worksheet to compute effective partner profit/loss ratios or time segmented allocation ratios and to adjust the ending capital for those partners whose interests in the partnership have changed during the year. Enter only partners whose interests changed during the year.

Transfer of Partner Interest Sections

Transfer of Interest versus Transfer of Capital

Entries in the Transfer of Partner Interest section are used only to recompute the profit/loss ratios and are not used to transfer the partners' ending capital balances. Use the Transfer of Partner Capital section to adjust the ending capital accounts for existing or new partners due to a transfer of a partner's interest in the partnership or due to a withdrawal of a partner from the partnership.

Calculation Options

The System computes an effective ratio based on the number of days in the partnership year that the partner had each specified resulting percentage. Including the initial percentage entered in the Basic Partner Data section, the System can compute 100 different sharing percentages during the year for any partner.

If you enter a special allocation in the Special Allocation worksheet, the effective ratio computed from entries in the Transfer of Partner Interest section is only used to allocate any remainder left over from the special allocation for that item.

Printing Options

The System calculates an effective ratio resulting from changes in partnership interest for each partner. This effective ratio is then used as the partner's default allocation percentage.

You can choose an option in the Schedule K-1 Calculation Options section to print this effective ratio as the end-of-year profit and loss ratios on Schedule K-1. If you do not chose this option, the end-of-year profit and loss ratios will print as calculated from the last transfer of interest for the year.

You can also choose an option in the Schedule K-1 Calculation Options section to print the end-of-year profit/loss ratios from this interview form as the end-of-year capital ownership percentages on the Schedules K-1.

Percentages Versus Units

If you are entering units for the partners in the Basic Partner Data section instead of percentages, enter units in the Transfer of Partner Interest section as well. Otherwise, enter percentages.

Transfer of Partner Capital Section

Use this section to adjust the ending capital accounts of existing or new partners due to transfer of a partner's interest in the partnership or due to withdrawal of a partner from the partnership.

When you use this section, the System prints a supporting statement detailing each affected partner's capital account for the transaction. This statement shows the capital accounts before the transaction, each partner's individual transactions, and the resulting ending capital accounts.

Determination of Capital To Be Transferred

There are three options to indicate the amount of capital to be transferred to receiving partner(s):

1. If you enter a percentage of capital to be transferred and choose the option to use end of year capital in the Transfer of Interest Options section, the System calculates the end-of-year capital account for the transferring partner. A percentage of that capital is then transferred to the receiving partner's(s') ending capital account(s).
2. If you enter a percentage of capital to be transferred and choose the option to use beginning of year capital in the Transfer of Interest Options section, the System uses your percentage of the transferring partner's beginning capital account to calculate the amount to be transferred.
3. You can enter a specific amount of capital to be transferred (in which case your entry in the Transfer of Interest Options section is ignored).

Transferred Capital Reporting Options

There are six options available for reporting the amounts of transferred capital. Enter the applicable code in the Transfer of Interest Options section:

Option 1 (Default): The transferred amounts carry to the contribution/withdrawal lines on Schedule K-1, Item L.

Option 2: The transferred amounts carry as positive and negative amounts of contributions on Schedule K-1, Item L.

Option 3: The transferred amounts carry to Schedule M-2 as increases and decreases.

Option 4: The transferred amounts adjust long-term capital gain or loss on Schedule K-1, lines 4e(1) and 4e(2).

Option 5: The transferred amounts adjust ordinary income or loss on Schedule K-1, line 1.

Option 6: The transferred amounts adjust rental real estate income or loss on Schedule K-1, line 2.

Capital Ratio and Form 8308 Print and Allocation Options

Use the boxes in the Transfer of Interest Options section to select various print and allocation options for the partners' capital ratios. Elections made in this section apply to the entire return, not just to the transfers entered on that sheet.

You can also choose to have Form 8308 prepared from entries in the Transfers of Partner Capital section by entering an "X" in the box in the Transfer of Interest Options section. Using this feature, you do not need to use the "Form 8308 Transfer Information" section. However, this feature is not available if you are using the option to zero out one or more partners. If you use that option, you must use the Sale or Exchange of Partnership Interests worksheet to produce the form.