What does partnership interest mean on the CPA exam?
Partnership interest. A partner's stake in the partnership itself, distinct from any interest in its underlying assets. It is a capital asset, except to the extent hot assets convert the gain to ordinary.
Defined against Sec. 741.
Which CPA exam sections use partnership interest?
Partnership interest appears in the TCP section of the CPA exam.
Related terms
- outside basis: A partner's tax basis in the partnership interest itself.
- capital asset: For tax, almost everything a taxpayer owns EXCEPT inventory, receivables, and depreciable or real property used in a trade or business.
- hot assets: A partnership's unrealized receivables and inventory.
- guaranteed payment: A payment to a partner for services or the use of capital, determined without regard to partnership income.
- noncontrolling interest: The share of a subsidiary that the parent does not own.
- ordinary income: Income taxed at the regular graduated rates rather than at preferential capital gain rates.