[Verse 1]
When partners come together with their cash and property
Seven twenty-one says no gain, contribute tax-free
But watch for services and debt relief exceptions here
The partnership begins when all the details are clear
[Chorus]
Partnership tax is flowing through
Seven oh four allocations too
Outside basis, inside basis, keep them straight
Seven fifty-two for debt we calculate
Hot assets, guaranteed payments, don't forget
Subchapter K rules help you place a safer bet
[Verse 2]
The partnership agreement sets the allocation plan
Income, gains, and losses distributed by their hand
But substantial economic effect must pass the test
Three parts to verify, don't settle for less
[Chorus]
Partnership tax is flowing through
Seven oh four allocations too
Outside basis, inside basis, keep them straight
Seven fifty-two for debt we calculate
Hot assets, guaranteed payments, don't forget
Subchapter K rules help you place a safer bet
[Verse 3]
Guaranteed payments under seven oh seven c
Like salary to partners, deductible you see
Outside basis starts with contributions that you make
Add income, subtract distributions that you take
[Bridge]
Seven fifty-four election changes inside ground
Seven forty-three and seven thirty-four come around
Current distributions under seven thirty-one
Liquidating payments when the partnership is done
[Verse 4]
When you sell your partnership interest, seven forty-one
But seven fifty-one hot assets can't be outrun
Disguised sales rules will catch you if you try to hide
Anti-abuse provisions keep you on the honest side
[Chorus]
Partnership tax is flowing through
Seven oh four allocations too
Outside basis, inside basis, keep them straight
Seven fifty-two for debt we calculate
Hot assets, guaranteed payments, don't forget
Subchapter K rules help you place a safer bet
[Outro]
From formation through liquidation, rules apply
Partnership taxation, now you're ready to fly