then, on the date of such reduction the employment of such employee shall be deemed terminated with respect to such partner to the extent of the actual reduction in such partner's proportionate interest in the general profits (or in the particular expenses) of the partnership. (For example, if $100 of WIN expenses were taken into account by a partner and if his proportionate interest in the general profits of the partnership is reduced from 60 percent to 30 percent (that is, 50 percent of his original interest), then the employment of the employee to which such WIN expenses relate shall be deemed terminated as to that partner to the extent of $50.) Accordingly, a recapture determination shall be made with respect to such partner. For purposes of such recapture determination the period of employment of any employee or employees with respect to whom WIN expenses were paid or incurred shall be the period beginning with the initial date of employment (as defined in paragraph (c)(1) of § 1.50A-3 ) with respect to the partnership and ending with the date on which such reduction occurs.
Period ending Dec. 31, 1972 | |
Total WIN expenses for the taxable year | $60,000 |
Partner A's share (50 percent) | 30,000 |
Partner B's share (50 percent) | 30,000 |
Assuming that during 1972 A and B did not directly incur any WIN expenses and that they did not own any interest in other partnerships, electing small business corporations, estates, or trusts incurring WIN expenses, each partner's share of the WIN expenses is $30,000. For the taxable year 1972, each partner's credit earned of $6,000 (20 percent of $30,000) was allowed under section 40 as a credit against his liability for tax.
Period ending Dec. 31, 1973 | |
Total WIN expenses for the taxable year | $60,000 |
Partner A's share (25 percent) | 15,000 |
Partner B's share (50 percent) | 30,000 |
Partner C's share (25 percent) | 15,000 |
26 C.F.R. §1.50A-7