The complexities of redeeming a partner’s interest in a partnership with payments over multiple years are increased when the redeemed partner receives a promissory note.
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Partner Transactions
Navigating the QSBS rules in pass-through structures
The rules for qualified small business stock become more complex when it is held through a pass-through entity or when the corporation operates through one or more partnerships. This article discusses QSBS eligibility rules, planning opportunities, and areas of uncertainty.
Fifth Circuit rejects ‘passive-investor’ definition of limited partner
The Fifth Circuit, overruling the Tax Court, held that for purposes of the Sec. 1402(a)(13) exclusion from self-employment tax, “limited partner” means a partner in a limited partnership that has limited liability.
Partner redemptions from ‘dry’ partnerships
A partnership whose sole asset is all the stock of a corporation offers opportunities but with potential pitfalls.
Why non-US directors can rarely exempt US-source compensation from US income tax
At $3,000 and never adjusted for inflation during nearly a century, the Sec. 861(a)(3) de minimis exception seldom applies.
The complex simplicity of partnership interests exchanged for services
Preventing unwanted tax consequences from compensatory partnership interests requires understanding Regs. Sec. 1.721-1(b)(2) and safe-harbor guidance under Rev. Procs. 93-27 and 2001-43.
Regs. address partnership recourse liabilities, related-party rules
The IRS issued regulations that finalize proposed regulations issued in 2013. The guidance is focused on when and to what extent a partner is treated as bearing the economic risk of loss and the special rules applying to a partner related to another partner.
Economic substance doctrine and related-party partnership transactions
To avoid potentially onerous penalties, taxpayers in controlled groups and their advisers must consider whether the economic substance doctrine will disallow the results of basis-shifting transactions involving a related-party partnership.
Partnerships in distress: Raising capital and debt exchanges
Taxpayers should consider tax planning issues for partnerships and their partners when raising capital and exchanging debt for equity.
Foreign partnership reporting requirements
U.S. persons owning an interest in a foreign partnership may be required to file Form 8865, and the partnership may also face additional U.S. filings.
The BBA’s ‘ceases-to-exist’ rule in partnership termination transactions
Under the centralized partnership tax audit regime of the Bipartisan Budget Act of 2015, a buyer of a partnership interest can take certain steps to avoid a potential tax exposure related to uncertain tax positions for preacquisition tax years.
Calculating an LLC member’s amount at risk
Understanding the amount and composition of an LLC member’s amount at risk is crucial to determining the Sec. 465 limitation on losses that may be claimed.
Limited partners and self-employment tax: A new test
The Tax Court recently held in Soroban Capital Partners that to determine whether a limited partner’s partnership distributive share is excluded from self-employment tax under Sec. 1402(a)(13), an analysis of the partner’s actual functions and roles is required. This article discusses what that analysis should entail and offers tax planning tips.
Current developments in partners and partnerships
This annual update reviews court rulings and guidance on issues including debt and income allocations, distributions, and basis adjustments.
A $10.7 million compensation deduction miss
The recent Hoops decision by the Seventh Circuit, affirming the Tax Court, highlights potential problems for accrual-basis employers of claiming a deduction of nondeferred compensation following mergers and acquisitions.
Impact of business interest expense limitation regs. on partner redemptions
This item analyses two related examples of partner redemptions — with and without Sec. 163(j) basis adjustments — to highlight and clarify both the existing and new issues.
Nonresident alien partner’s gain on inventory items sourced to US
Nonresident alien’s Sec. 751 gain on sale of partnership interest was sourced to United States.
Real estate partnership restructuring and potential disguised sales
With certain restructuring transactions, careful consideration is needed to prevent the transaction from being deemed a disguised sale.
Regulations streamline partnership basis elections
Final regulations issued by the IRS and Treasury allow a Sec. 754 election statement to be submitted without a partner’s signature.
Payments to LLC members for services
When LLC members receive payments for services performed for the LLC, the tax treatment depends on whether the member is performing the services in the capacity as a member.
PRACTICE MANAGEMENT
2026 tax software survey
CPAs rate their return preparation software’s performance during this year’s tax season.
