1st yr TP is General Partner then 2nd yr TP is

[AZ-Tax]

Limited Partner in Public Partnership. This normal?

[DaveO]

Is this an Oil and Gas partnership?

They will do this so the partner can take the intangible drilling cost deductions the first year, after which they are converted to limited partners. Intangible drilling costs being an exception to the passive activity rules.

Doesn't smell right to me and I suppose goes to show who has the lobbying muscle in DC.

[AZ-Tax]

Yes Oil and Gas partnership and 1st year I had the TP

signed a letter stating that he "materially participated" for no where on his K-1 does it address that.

[DaveO]

Don't worry it seems to be legal even though it seems wrong. The part I don't like is the fact they don't get tagged with SE tax when the thing starts paying off. The first year I saw it I spoke with a CPA and an Attorney from the partnership and they sent me some cites that satisfied me as to the legality of the deal. These things must pay a huge commission to the broker. I impressed on my clients the risk they were assuming by being a GP in such a business.

[AZ-Tax]

Dave, I use to reside in Lincoln NE......

Whats up with Huskers BB in the NIT? Hope CU wins tonight.

[AZ-Tax]

Huge Commission....yea

[These things must pay a huge commission to the broker. I impressed on my clients the risk they were assuming by being a GP in such a business.[/QUOTE]

Yea, and I wish my client would have came to me first before buying it. I would have sold it to him.

[DaveO]

Bad case of road nerves I'd guess. I'm more of a mat man myself and was glad to see the boys tie up Iowa State in the Big 12 championships. Burroughs our 157 lb is trying to be the first unbeaten NCAA champion. Finals are Sat night on one of the ESPN channels.