ACCT429
Week3 Project
Research Essay Outline

I. Topic

II. Introduction
A. What are the rules
B. Who they apply to

III. Body
A. What is a PTP
B. How it works
C. Why it matters
D. Examples of PTPs
E. Benefits of PTP’s

IV. Conclusion

Publicly Traded Partnerships (PTPs) and the passive loss limitations

According to the IRS Publication 925, there are two sets of rules that may limit the amount of deductive loss from a trade, business, rental, or other income producing activity. These rules apply to individuals, estates, trusts, personal service corporations and closely help corporations. When it comes to PTP the rules must be applied separate to income or loss from a passive activity. In this essay I will tell what a PTP is and I will also give examples of some PTP’s. I will also tell what benefits these PTP’s claims will result from their investments.

A publicly traded partnership (PTP) is a partnership between limited partners who provide the capital for the company and the general partners who manage the company. Limited partnership shares in the company are publicly sold by the partnership, offering equal equity or dividends of a public traded company. The publicly traded partnership must withhold tax on any actual distributions of money or property to foreign partners

Real estate, energy (including alternative energy fuels), transportation and commodities are some of the PTP’s that the IRS restricts to limited partners.

This matters because PTP’s combine the tax advantages of passing along tax liabilities to partners when distributions are made and the liquidity of a publicly traded company. For tax purposes, the distributions of income/dividends to limited partners are not treated as taxable income, but rather as a return of capital which reduced the partner's basis.
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