Key Takeaways
- JV tax allocations must have "substantial economic effect" under Section 704(b).
- Promote is taxed as capital gains (23.8%) if held 3+ years; otherwise ordinary income (40.8%).
- The 3-year holding period under Section 1061 is critical for shorter-hold strategies.
- Cost segregation can increase first-year depreciation 2-3x.
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Test Your Knowledge
1.How are JV partnerships typically taxed?
2.How is the operating partner's promote (carried interest) taxed?
3.What is a "special allocation" in partnership taxation?