Preston Partners, a calendar-year partnership, has two unrelated general partners, Jack Preston and Diane Dunn. Jack has a 75 percent ownership interest in the partnership and Diane has a 25 percent ownership interest. Both partners are actively involved in the operations of the partnership and have substantial tax basis in their partnership interests. In the current year, Year 1, there were several transactions between the partners and the partnership including loans, sales of property, and payments to partners for services performed for the partnership.

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It seems like youre describing a scenario involving a partnership its partners and various transactions among them Heres a summary of the key points a... View the full answer