Discussion Question $9-2($LO$.1)$

Discussion Question $9-3($LO$.2,4,6,7,8)$

How does a partnership report its income for tax purposes? Who makes most elections related to partnership income and deductions?

In keeping with the

aggregateentityconsolidated

concept, a partnership must file

a tax reportingan informational

return, Form

$1120104110401065$

$.$ On this return,

each partnerthe partnership

makes most elections regarding the treatment of partnership items and

the taxno tax

is calculated.

What two theories underlie most partnership tax rules? As an example, contrast the theories underlying the treatments of $(1)$ the business interest expense limitation and $(2)$ the qualified business income deduction.

For business interest expense, the

partnerpartnership

determines whether the $30\%($or $50\%)$ deduction limitation under $163($j$)$ applies. Treatment of the carryover at the partner level is consistent with the

aggregateentityconsolidated

theory.

The

partnerpartnership

calculates the $199$A qualified business income deduction. The

partnerpartnership

calculates and reports the information the

partnerspartnerships

need to calculate any limitation on the deduction. This treatment is consistent with the

aggregateentityconsolidated

theory.