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TAXABLE INCOME AND TAX BASIS | 3 Months Ended
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Mar. 31, 2020
TAXABLE INCOME AND TAX BASIS |
TAXABLE INCOME AND TAX BASIS | NOTE 13. TAXABLE INCOME AND TAX BASIS Taxable income reportable by the Partnership and includable in its partners’ tax returns is different than financial statement income because of tax free exchanges, different depreciation methods, different tax lives, other items with limited tax deductibility and timing differences related to prepaid rents, allowances and intangible assets at significant acquisitions. Federal taxable income of approximately $2,039,000 was approximately $4,508,000 less than statement income for the year ended December 31, 2019. The Federal cumulative tax basis of the Partnership’s real estate at December 31, 2019 is approximately $5,311,000 less than the statement basis. The primary reasons for the difference in tax basis are tax free exchanges, accelerated depreciation and bonus depreciation. The Partnership’s Federal tax basis in its joint venture investments is approximately $1,688,000 more than statement basis. State taxable income may be significantly different due to different tax treatments for certain items. Certain entities included in the Partnership’s consolidated financial statements are subject to certain state taxes. These taxes are not significant and are recorded as operating expenses in the accompanying consolidates financial statements. The Partnership adopted the amended provisions related to uncertain tax provisions of ASC 740, Income Taxes. As a result of the implementation of the guidance, the Partnership recognized no material adjustment regarding its tax accounting treatment. The Partnership expects to recognize interest and penalties related to uncertain tax positions, if any, as income tax expense, which would be included in general and administrative expense. In the normal course of business the Partnership or one of its subsidiaries is subject to examination by federal, state and local jurisdictions in which it operates, where applicable. As of March 31, 2020, the tax years that generally remain subject to examination by the major tax jurisdictions under the statute of limitations is from the year 2016 forward. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted in response to the COVID-19 pandemic. The act, among other changes, increases the business interest expense limitation to 50% of adjusted taxable income for tax years beginning in 2020 for partnerships. These changes may have an impact on the Partnership’s taxable income for the year ended December 31, 2020. For partnerships, the CARES Act increases the business interest expense limitation to 50% only for taxable years beginning in 2020. For partnership taxable years beginning in 2019, the ATI limitation remains at 30%. However, half of a partnership’s EBIE allocated to a partner for a 2019 taxable year can automatically be treated as deductible interest expense in the partner’s first taxable year beginning in 2020. The other half of the EBIE allocated to the partner is treated as it normally would be. Partners can elect out of treating half of 2019 EBIE as automatically deductible in 2020. On the other hand, partnerships, rather than their partners, are entitled to elect out of the increase in the ATI limitation for 2020. Whether a partner will be better off or worse off as a result of this special rule for partnerships will depend on the facts and circumstances. For example, suppose a partnership with pro rata allocations and a calendar taxable year has $100 million of ATI in each of 2019 and 2020 (or has less ATI in 2020, but elects to substitute 2019 ATI for 2020 ATI) and no business interest income or floor plan financing interest in each year.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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