The largest portion of the gain is ordinary income rather than capital gain because the sale of the PTP is treated as the sale of an undivided interest in the property owned by the partnership. Now turn to the concept of cash flow and summarize the partner's cash flow for the years through , accounting for the investment, cash distributions, sale, and the tax impact of the flowthrough items and the sale proceeds to the partner. A small amount of tax was paid in and because of the flowthrough interest income reported in those years.
Table 6, below, summarizes the partner's cash flow by year and includes the effect for taxes. Now compare the same investment and cash distributions as if the investor held stock in a corporation. The tax treatment of the two different investments has a significant effect on the after - tax cash receipts.
Based on this information, the internal rate of return on holding the stock is 6. The tax reporting is also much easier when investing in corporate stock. In the year of sale, Form - B reports the information for investors to report the sale on Schedule D of their individual returns. Overall, the annual reporting and recordkeeping for a stock investment is much simpler than that of owning an interest in a PTP.
This analysis does not include the cost of the additional time required in reporting the yearly flowthrough information from the PTP and the much more complex reporting requirements in the year of sale. If these were quantified and factored into the analysis, the investment in corporate stock would look even more favorable.
PTPs as investment vehicles are often touted as having a high cash yield compared to a dividend - paying corporation. However, as this article demonstrates, there are many differences, from a tax perspective, when comparing an investment in a PTP to owning stock in a corporation. These differences are often not apparent to the typical investor until after the end of the year when a Schedule K - 1 arrives.
The different annual reporting requirements carry a very high burden for a PTP investor. The investor in a PTP receives a Schedule K - 1 , which requires inputting information from the Schedule K - 1 , tracking basis information, and considering the foreign tax reporting and state tax implications when filing an individual tax return.
This is much more complex than investing in the stock of a corporation, which would require only inputting information from Forms - DIV and - B. There are also differences for distributions cash distribution for a PTP and cash dividend distribution for a corporation and the sale of the investment, as both are taxed very differently.
The PTP distribution is generally a return of basis with the tax effect deferred until the interest is sold, whereas the distribution from the corporation is a currently taxable dividend. The flowthrough nature of a partnership interest brings into play the various tax rate differences from the many types of income, gains, losses, and deductions where the investor is usually subject to both ordinary income and capital gains tax rates. This produces a preferential tax treatment for an investment in a corporation over a PTP.
To avoid many of the tax implications discussed, investors should consider using a corporate investment, such as an exchange - traded fund ETF that holds interests in a number of PTPs. In this case, the investor's ownership interest would be similar to that of an investment in corporate stock; there would be no flowthrough consequences; and at the time of the sale, Sec.
This alternative would also allow investors to invest in PTPs without the complex and involved tax reporting and recordkeeping requirements. The distributions from the ETF are often return - of - basis distributions that only result in a larger capital gain when the ETF is sold.
In summary, investors and their tax advisers must be aware of the intricacies of investing in PTPs. The popular press seems to treat an investment in a PTP as similar to an investment in a corporation, but experience says otherwise. The tax reporting is considerably more complex and generally requires more work compared to a stock investment. As with all investments, investors should do their research, understand the terminology and how the investment is treated, and understand the tax implications or hire a professional so as to avoid unexpected tax complexities.
The "at risk" rules implemented by Congress attempt to limit the taxpayer's deduction of losses to those that are economically paid for. In general, the at - risk rules mirror the calculation of tax basis with the main difference being the treatment of liabilities related to the investment.
In general, at - risk basis only includes recourse liabilities except in the case of a real estate investment, which also includes qualified nonrecourse liabilities Sec. A passive activity is any activity involving a trade or business that the taxpayer does not materially participate in. By definition, an owner of an interest in a PTP is not materially participating.
Passive activity is often discussed in contrast to nonpassive activity where there is material participation. The holding in Rodriguez makes it clear that the "deemed dividend distribution" in Sec. Business meal deductions after the TCJA. This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction.
This article discusses some procedural and administrative quirks that have emerged with the new tax legislative, regulatory, and procedural guidance related to COVID Toggle search Toggle navigation. Because PTPs may have operations in multiple states, partners may be required to file returns in a number of states outside of their state of residence because of their ownership interest in the PTP.
Because of the differences in the treatment of corporations and partnerships, equivalent investments in a corporation and a PTP will often yield significantly different tax results. Partners in PTPs must continually track three bases for their PTP interests: tax basis, at-risk basis, and alternative minimum tax basis. The losses generated by a PTP that flow through to its partners are passive, subject to the passive loss limitation rules. These losses can be deducted only against passive income of the PTP or when the interest in the PTP is disposed of in a taxable transaction.
Transferor of Property to a Foreign Corporation , and foreign income items may require a partner to spend a significant amount of time to determine the proper treatment of the income. Publicly traded partnerships A PTP is any partnership if interests in the partnership are traded on an established securities market or interests in the partnership are readily tradable on a secondary market or its substantial equivalent. Tax considerations The owner of a PTP interest must be prepared to accurately report all of the information that flows through on the annual Schedule K - 1.
Implications PTPs as investment vehicles are often touted as having a high cash yield compared to a dividend - paying corporation.
When you enter no with PTP port configuration commands, the specified port property is set to the default value. To determine the value in seconds for the ptp global command interval variable, use a logarithmic scale. Below are examples of the interval variable value converted to seconds with a logarithmic scale:. In this mode, the switch participates in the selection of the most accurate master clock. Use this mode when overload or heavy load conditions produce significant delay jitter.
The link delay time between the participating PTP ports and the message transit time is added to the resident time. Use this mode to reduce jitter and error accumulation. This is the default in Power Profile mode. The participating grandmaster clock, switches, and slave devices should be in the same domain. The PTP packets have a default priority of 4. Lower values take precedence. For example, enter 2 to give a switch priority over identical switches.
The default is Optional, BC mode only Specify time-property preservation:. Preserving the time properties prevents slave clocks from detecting a variance in the time values when the redundant GMC comes out of standby.
No PDV filtering. The range is 0 to 4. The default is 1 2 seconds. The range is 2 to The default is 3 8 seconds. The range is -3 to 5. The default is 0 1 second. The range is —2 to 1. The default is 1 second.
The range is from 50 to nanoseconds. The default is nanoseconds. Optional Save your entries in the configuration file:. The following example configures the switch for P2P transparent mode, specifies allow-without-tlv PTP message processing, and uses default values for all PTP interval settings:. The following example configures the switch for boundary clock mode using the peer delay request pdelay-req mechanism and uses default values for all PTP interval settings:.
This section describes how to configure the switch to operate in Default Profile mode. The switch sends untagged PTP packets on the native VLAN when the switch port connected to the grandmaster clock is configured as follows:. When the grandmaster clock requires tagged packets, make one of the following configuration changes:. Force the switch to send tagged frames by entering the global vlan dot1q tag native command.
Configure the grandmaster clock to send and receive untagged packets. If you make this configuration change on the grandmaster clock, you can configure the switch port as an access port. These are some guidelines for configuring the Default Profile on the switch:. Configure the switch for Default Profile mode when the switch is in Power Profile mode.
If the switch is already in Default Profile mode, this command has no effect. A switch clock in this mode synchronizes all switch ports with the master clock. This switch does not participate in master clock selection and uses the default PTP clock mode on all ports.
This is the default clock mode. The message transit time is added to the resident time. The range is -2 to 6. The following example configures the switch to operate in Default Profile mode and end-to-end transparent mode and uses default values for all PTP interval settings:.
The following example configures the switch for boundary clock mode using the peer delay request pdelay - req mechanism and uses default values for all PTP interval settings:. This section describes how to display the following PTP Serviceability statistics and information:. To display counter information for PTP messages sent and received on all interfaces, use the show ptp port counters messages command. For example:. Enter clear ptp port counters messages to clear the message counters for all interfaces.
General message not tagged with a timestamp used to establish a master-slave hierarchy. Event message tagged with a timestamp when data packets reach or leave a port and used to synchronize ordinary and boundary clocks. General message not tagged with a timestamp used to used to synchronize ordinary and boundary clocks. Delay request—Event message tagged with a timestamp when data packets reach or leave a port and used to synchronize ordinary and boundary clocks.
Delay response—General message used to synchronize ordinary and boundary clocks. Peer delay request—Event message tagged with a timestamp when data packets reach or leave a port and used to measure the link delay in transparent clocks. Peer delay response—Event message tagged with a timestamp when data packets reach or leave a port and used to measure the link delay in transparent clocks. Peer delay follow up—General message not tagged with a timestamp used to measure the link delay in transparent clocks.
PTP errors are categorized as field mismatch errors, unexpected messages, duplicate messages, and generic errors. To display counter information for PTP errors that occurred on all interfaces, use the show ptp port counters errors command.
Enter clear ptp port counters errors to clear the error counters for all interfaces. The timestamp error counter is incremented when the software is unable to fetch the timestamp for a given PTP message. Invalid GMC ID—The grandmaster clock identity of ingress announce messages has an invalid value the grandmaster clock identity of ingress announce messages is the same as the clock identity of the local PTP clock.
Duplicates are identified by checking the PTP sequence number on received messages. PTP software might fail to send PTP messages due to reasons such as memory allocation failure, failure to obtain the correct outgoing interface information, etc.
Miscellaneous Error—This counter indicates the number of miscellaneous errors that have occurred in the PTP protocol. Any error other than the ones listed above is classified as a miscellaneous error. The PTP offset value is the measured offset of the clock from the master clock, in nanoseconds. The mean path delay is the average time, in nanoseconds, taken by PTP frames to travel between master and slave. You can also display a histogram of offset, delay, and time errors, where the historical values of the field specified are divided into bins to show the data distribution.
High offset and delay values can indicate a problem, for example, when a device goes down in the network and the link to the master is available but not viable. Ideally, offset and delay values should be as small as possible. Some PTP modes or profiles might cause higher offset values.
Offsets can be negative. Offset and delay values are shown for the last day and the past 5 seconds, 15 seconds, 1 minute, 5 minutes, 15 minutes, 1 hour, 5 hours, 15 hours, 1 day same as last day , 5 days, 15 days, and more than fifteen days. To display PTP offset, enter the show ptp internal-info offset command, for example:.
To display the mean path delay, enter show ptp internal-info delay , as shown in this example:. To display a histogram of PTP offset, delay, or time-error data, enter the show ptp histogram [offset delay time-error] command. Data is shown for the last 60 seconds, the last hour, and the last 24 hours. Values are divided into ranges of 0 to 20 nanoseconds, 20 to 50 nanoseconds, 50 to nanoseconds, to nanoseconds, to nanoseconds, to nanoseconds, to 10, nanoseconds, and greater than 10, nanoseconds.
Offset and time-error values are further classified as negative or positive. Offset—Available when the clock mode is boundary; displays histogram for offset from master. Delay—Available when the clock mode is boundary or gmc-boundary; displays histogram of mean path delay data. You can specify message-type to filter out the logs based on the PTP message type:. Skip to content Skip to search Skip to footer. Available Languages. Download Options.
Updated: December 20, The slave receives the Sync message and notes the time of reception t2. Figure 2. Detailed Steps—Boundary Clock Synchronization. Port 2 receives and generates timestamp t2 for this message. Figure 3. Boundary Clock A boundary clock in a PTP network operates in place of a standard network switch or router.
Figure 4. PTP Clock Hierarchy. A PTP profile is usually specific to a particular type of application or environment and defines the following values: Best master clock algorithm options Configuration management options Path delay mechanisms peer delay or delay request-response Range and default values of all PTP configurable attributes and data set members Transport mechanisms that are required, permitted, or prohibited Node types that are required, permitted, or prohibited Options that are required, permitted, or prohibited.
The supported transparent clock mode is end-to-end E2E. Table 1. Layer 3 packets. PTP Accounts Production v PC Share Register v Important : Must be installed directly on the server for network installations.
Forms Online v Sign up to our newsletter to receive news on IRIS, our big ideas and latest blog posts. Chat now. Download Installation Guide.
0コメント