This article reviews and analyzes recent rulings and decisions involving partnerships.
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TOPICS / PASSTHROUGHS
Partnership and LLC Taxation
Temp. Regs. Allow Deemed Election to Expense Startup, Organizational Costs
Effective July 8, 2008, the IRS issued new temporary regulations to amend the rules under Secs. 195, 248, and 709 regarding elections to deduct startup expenditures and organizational expenditures of corporations and partnerships (T.D. 9411).
Like-Kind Exchanges of Partnership Properties
A partnership can distribute real property to its partners so that the partners can exchange the property in a Sec. 1031 like-kind exchange; if the exchange is properly structured, some of the partners can trade their interests in the property distributed in Sec. 1031 exchanges and some of the partners can sell their interests in the property in taxable transactions.
Partner Allowed to Make Different Elections for Different Partnership Interests
The Tax Court held that taxpayers owning multiple interests in the same partnership were entitled to make different elections under Sec. 6223 for each interest.
Termination of a Partnership Interest
This item explores the two main methods used when terminating a partnership interest: purchase and liquidation.
Treatment of Investment Interest Expense Allocable to Partnerships Trading Activity
IRS rulings confirm the proper tax treatment of investment interest expense allocable to a partnership’s trading activity
IRS Flexes Its Muscles Under the Partnership Anti-Abuse Rules
Co-Editors: Steven F. Holub, CPA; Jane T. Rubin, CPA Prior to 1997, taxpayers had to navigate a complex set of rules to determine whether their association was one that would be taxed as a corporation or one that would be taxed as a partnership. In many situations the entity of
Treatment of Loans to U.S. Partners Under the U.S.-Germany Tax Treaty
Germany’s federal tax court ruled that interest payments received by a U.S.-resident partner on a loan to his German partnership can be taxed only in the United States in accordance with Article 11(1) of the U.S.-Germany income tax treaty and are exempt from German taxation.
A Practical Guide to the Tax Issues of Investing in Master Limited Partnerships
The tax reporting related to publicly traded partnerships has become an increasingly significant issue facing the tax practitioner community.
Tax Treatment of Government Grants to Partnerships Becomes Less Clear
Federal, state, and local governments have been providing tax incentives to businesses for many years. Along with the long history of government incentives to taxpayers, there is a long history of controversy over the tax treatment of these incentives.
IRS Issues New Rules on Allocation of Partnership Items
Proposed regulations under Sec. 704(c) provide that the Sec. 704(c) anti-abuse rule takes into account the tax liabilities of both the partners in a partnership and certain direct and indirect owners of such partners.
Transfers of Partnership Interests Are Not Indirect Gifts of Stock Held by Partnership
The Tax Court held that a transfer of interests in a family limited partnership that held only stock in one corporation was a transfer of the partnership interests, not an indirect transfer of stock held by the partnership.
Flexibility in Retroactive Partnership Agreement Amendments
Timely modifications to a partnership agreement can allow partners to engage in a measure of self-help to change their economic and tax situations.
Partnership Returns: Late Filing Penalties Increase
Late 2007 legislation brought changes to Sec. 6698, which provides for penalties against a partnership for filing a late or incomplete return.
Holding Period and Basis Considerations of Partnership Conversions
This article summarizes the tax consequences of entity changes involving the conversion to or from any entity treated as a partnership for federal income tax purposes (e.g., general partnerships, limited partnerships, LLCs with two or more members, and limited liability partnerships).
Current Developments in Partners and Partnerships
During the period of this update (November 1, 2006–October 31, 2007), Treasury and the IRS worked to provide guidance for taxpayers on numerous changes that had been made to subchapter K over the past few years.
Special Issues Related to Distributions of Partnership Interests by Estates and Trusts
The complex rules governing the tax treatment of distributions from estates and trusts are further complicated when a partnership interest is distributed.
Interest Deduction on Debt-Financed Distributions
Editor: Kevin F. Reilly, J.D., CPA Although the real estate market has cooled off in many areas, the value of commercial properties seems to have been less affected than that of residential properties. In fact, many commercial properties continue to be worth substantially more than their historic cost. Most commercial
Sec. 1446 Withholding
Editor: Joel E. Ackerman, CPA, MST Foreign investment in the United States continues to rise. The investment vehicle of choice, especially in the case of real estate, is generally a tax-transparent entity such as a limited partnership, limited liability company, or similar foreign transparent entity that is treated as a
Redemptions in Conjunction with Partnership Mergers Can Create Unexpected Tax Consequences
Editor: Frank J. O’Connell, Jr., CPA, Esq. The IRS has provided a road map for partnership mergers or consolidations in Regs. Sec. 1.708-1(c). When two or more partnerships merge or consolidate into a single partnership, the resulting partnership is, for purposes of Sec. 708, considered a continuation of any partnership
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