In recent years, more and more partnership agreements have been drafted using the targeted capital account approach for allocating partnership items of income or loss (targeted capital approach) versus the typical Sec. 704(b) economic effect approach (waterfall approach).
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TOPICS / PASSTHROUGHS
Partnership and LLC Taxation
Partner Cannot Sue for Refund of Penalty Paid by Partnership
The Eighth Circuit reversed a district court and held that where a partnership paid a penalty under a closing agreement with the IRS, a partner in the partnership did not have standing to sue for a refund of part of the penalty payment.
Using a Limited Liability Partnership as the Entity of Choice
A new type of entity that has appeared in the United States in recent years is the limited liability partnership (LLP) or registered limited liability partnership (RLLP). This entity is similar in many respects to the limited liability company (LLC). All states now have LLP statutes.
Current Developments in Partners and Partnerships
This article reviews and analyzes recent rulings and decisions involving partnerships.
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.
INDIVIDUALS
Current Developments in Taxation of Individuals: Part 1
This update surveys recent federal tax developments involving individuals, including court cases, rulings, and guidance issued during the six months ending October 2025.
