The IRS finalized proposed regulations on withholding from transfers of partnership interests to foreign persons and the definition of effectively connected income for those purposes.
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TOPICS / PASSTHROUGHS
Partnership and LLC Taxation
Divorce settlement payments do not increase LLC basis
Payments to ex-wife and divorce lawyer do not increase taxpayer’s basis in an LLC.
Economic issues when forming an LLC
A number of issues must be considered when reviewing the organizational documents for a limited liability company, including member compensation, allocation of income and loss, and when distributions will be made.
Upcoming deadline to amend certain BBA partnership returns
While the ability to temporarily file amended returns is welcome by many BBA partnerships,
some unanswered questions remain about the consequences of doing so, and in some circumstances filing an AAR could be preferable.
Proposed rules govern carried interests
The IRS issued proposed regulations under Sec. 1061, enacted by the law known as the Tax Cuts and Jobs Act, which requires owners of certain partnership interests to hold them for three years to be eligible for capital gain treatment.
The CARES Act and opportunities to implement changes on previously filed returns
The following discussion mostly focuses on the ability of partnerships to file amended returns and
the QIP technical correction under the guidance issued in Rev. Procs. 2020-23 and 2020-25, respectively.
Partnership allocations lacking substantial economic effect
If a partnership’s allocations are not respected, the IRS or the courts can reallocate items of income or loss and assess underpayment or accuracy-related penalties.
Partnership form being redesigned for 2021
The IRS proposes modifying the partnership form (Form 1065) to help standardize the format of international tax items.
Sec. 743(b) adjustments: Shortcuts and surprises
This discussion considers reasons the purchaser of a
partnership may want to rethink the use of such shortcuts when estimating the federal income tax consequences associated with a Sec. 743(b) adjustment in an acquired partnership interest.
Tax savings opportunities from the CARES Act
This article summarizes business and individual tax provisions of the CARES Act, emergency legislation designed to speed relief to employers and individuals who are struggling due to the COVID-
19 pandemic.
Partnerships, a pandemic, and Rev. Proc. 2020-23
Partnerships must weigh the benefits of amending returns now that administrative hurdles have been
removed.
LLC mergers
When advising on a merger of LLCs, tax advisers
must consider the application of state merger law, the continuity of the merged entities, and whether the merger constitutes an assets-over or assets-up
transaction.
Administrative adjustment requests under the BBA
This item briefly summarizes the BBA rules, discusses the requirements for filing an AAR under Sec. 6227, and addresses the effects of filing an AAR on certain types of partners.
State considerations when amending BBA partnership returns
This discussion provides a review of the federal filing requirements for amending partnership returns and focuses on three states that have taken varying approaches to address the corresponding state effects of the BBA.
Deduction limitations of Sec. 162(m) to compensation paid by partnerships in Up-C and UPREIT structures
Proposed regulations change the paradigm for the tax treatment of compensation paid by a partnership situated below a publicly held corporation in an Up-C or UPREIT structure.
Withholding and reporting of partnership distributions to non-US partners
The mechanics of the withholding regime seem straightforward, but they can be difficult for certain
tiered partnership structures.
Partnerships can file amended returns to get CARES Act benefits
To allow those partnerships to take advantage of the beneficial tax provisions in the Coronavirus Aid, Relief, and Economic Security Act, the IRS is allowing partnerships to file amended returns for 2018 or 2019.
A guide to changing previously filed partnership returns
This article explains the procedures for making adjustments to previously filed partnership returns, a process that changed significantly with the creation of the centralized partnership audit regime.
Deduction for worthless partnership interest
A recent Tax Court case provides a road map for establishing the legal requirements needed to sustain a deduction for worthlessness, and reinforces the position that actual abandonment of a partnership interest is not required to claim a loss under Sec. 165(a).
Commercially reasonable expectation of payment under final Sec. 752 regulations
This item discusses final regulations providing guidance on when partnership liabilities are recognized as recourse under Sec. 752.
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