Section HZ 3 — Income Tax Act 2007: Special partnerships: transition into limited partnerships and limited partnerships deduction rules

HZ 3 Special partnerships: transition into limited partnerships and limited partnerships deduction rules When this section applies (1) This section applies when a special partnership under Part 2 of the Partnership Act 1908— (a) is in existence on 1 April 2008; and (b) is terminated and a limited partnership registered under the Limited Partnerships Act 2008 (the new limited partnership ) succeeds to that special partnership. No disposal: same partnership (2) No partners’ interests are disposed of merely because of the termination and succession described in subsection (1)(b). The partners of the special partnership are treated as the same partners of the new limited partnership. Initial basis (3) For the purposes of applying sections HG 11 and HG 12 (which relate to limited partnerships deduction rules) to the partners of the new limited partnership, all of the partners must choose one of the 2 following methods for calculating their partner’s basis under section HG 11(3): (a) they may choose to use the market value or the accounting book value of the amounts described in section HG 11(3) , as at the day the calculation is first performed, namely the last day of the first income year in which they are subject to sections HG 11 and HG 12 ; or (b) they may choose to apply section HG 11(3) as if the special partnership had always been a limited partnership and all relevant rules relating to limited partnerships had always existed (applying those rules with any necessary modifications). Initial basis not less than zero (4) If the application of sections HG 11 and HG 12 , as modified by this section, calculates a partner’s basis as less than zero, then the partner’s basis is treated as being zero. Defined in this Act: disposal, limited partnership , partner , partner’s interests , partnership Section HZ 3: added, on 1 April 2008, by section 21(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).