Draft a letter to the WIT controller

Capital gain from sale of land 100,000 The land was contributed by DASH, the other partner, when its value was $260,000. The partnership sold the land for $300,000. The partnership used this cash to repay all the partnership debt and pay for research and development expenditures, which a tax partner in your firm has said RIP can deduct this year. We want to be sure we can deduct our full share of this loss, but we do not believe we will have enough basis to do so. Draft a letter to the WIT controller that describes the following. l WIT’s allocation of partnership items. l WIT’s basis in the partnership interest following the allocation. l Any limitations on loss deductions. l Any recommendations you have that would allow WIT to claim the full amount of losses in 2010. WIT’s 2009 Schedule K–1 accurately reflects the information needed to compute its basis in the partnership interest. The research expenditures are fully deductible this year, as the partner said. Your client has experience researching issues in the Internal Revenue Code, so you may use some citations. However, be sure that the letter is written in layperson’s terms and that legal citations are minimized.


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