Income or Loss. The 1986 Act distinguishes between income from a "passive" activity and portfolio income. A passive activity includes (1) trade or business activities in which the taxpayer does not materially participate, and (2) rental activities where payments are primarily for the use of tangible property. In general, losses generated by a passive activity will only be allowed to offset income from a passive activity. Portfolio income generally includes interest, dividends, royalty or annuity income and gain from sales of portfolio assets, for example, property held for investment. Portfolio income is not treated as passive income and must be accounted for separately. Portfolio income is reduced by deductible expenses (other than interest) that are clearly and directly allocable to such income. Properly allocable interest expenses also reduces portfolio income. With regard to interest, the Treasury has issued Temporary Regulations which adopt a tracing rule. Interest attributable to indebtedness which is used to purchase an interest in a passive activity will be regarded as passive and subject to the passive loss rules. Thus, if a Limited Partner borrowed all or a portion of the funds used to purchase his Unit(s), interest paid on such borrowing could be used to offset income attributable to a passive activity. The distinction between passive income and portfolio income thus has a material effect on the Partnership and the Limited Partners. If the Partnership is engaged in a passive activity, any income from the Partnership is deemed "passive income" which is available to be offset by any other passive losses which the Limited Partner has from other sources. Portfolio income cannot be offset by such passive losses. Specifically, passive losses from the Partnership net of taxable income from the Partnership may be used to offset passive income from other sources, with any unused losses carried over into the next tax year, where they are available to offset passive income from the Partnership and other sources. In the year that the Unit is disposed of, or the Partnership is dissolved, any unused passive loss is available to offset any gain upon the disposition or dissolution, as the case may be, then to offset any passive income from other sources and, finally, to offset ordinary income. The Treasury has promulgated certain Temporary Regulations which provide that the lesser of the Partnership's net passive income or the Partnership's equity financed interest income shal...
Income or Loss. The Borrower shall not permit Consolidated Income to be a negative amount (a loss) for any fiscal quarter commencing on or after July 1, 1998 or for any fiscal year commencing on or after January 1, 1998.
Income or Loss. Income or Loss for any Fiscal Year means the Partnership's taxable income or loss for the Fiscal Year, determined in accordance with Section 703(a) of the Code (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code shall be included in taxable income or loss), with the following adjustments:
Income or Loss. Income or Loss of the Partnership (including, without limitation, Nonrecourse Deductions and Partner Nonrecourse Deductions) shall be computed in the same manner as for federal income tax purposes, provided, however, that: (i) any deductions for depreciation, amortization, or similar expense attributable to property contributed to the Partnership by a Partner shall be determined as though the adjusted tax basis of such property on the date it was acquired by the Partnership was equal to the agreed fair market value of such property as of such date; (ii) any income, gain or loss attributable to the taxable disposition of any Partnership asset shall be determined by the Partnership as though the adjusted tax basis of such asset as of the date of disposition was equal to the fair market value of such property at the time acquired by the Partnership minus the aggregate deductions for depreciation, amortization or similar expense attributable to the property (in the case of contributed property, computed in accordance with clause (i)); and (iii) the computation of all items of income, gain, loss and deduction shall be made without regard to any election under Section 754 of the Code which will be made by the Partnership (except to the extent required by Treasury Regulation § 1.704-1(b)(2)(iv)(m)) and, as to those items described in Section 705(a)(1)(B) or 705(a)(2)(B), without regard to the fact that such items are not includable in gross income or are not currently deductible or capitalizable for federal income tax purposes.
