TAX 9900 Lecture Notes - Lecture 65: Ordinary Income
Document Summary
707(a) and 707(c: prior to 1954, law was unclear as to whether a partnership could pay a salary to a partner for tax purposes instead considering all amounts part of distributive share. Application of aggregate theory, as partnership not viewed as an entity for these purposes: 1954 congress resolved issue by creating three categories of partner-partnership compensation transactions. 704(b) applies to payments for services or capital made to a partner acting in that capacity if amount is determined with reference to the income of the partnership. 707(a) governs transactions in which partner is viewed as an independent actor with respect to the partnership (i. e. , not in capacity as a partner) 707(c) governs fixed of guaranteed payment for services or the use of capital. 61(a), 162(a) and 263 the payment is treated as though the recipient were not a partner. If i lend $ to partnership and struck loan agreement, can be issues as well!
