A recent Chief Counsel Advice memo underscores the importance of having the right person sign a partnership’s returns and other tax documents filed with the IRS.
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TOPICS / PASSTHROUGHS
Reporting & Filing Requirements
Sec. 987 final regulations: A practical approach for partnerships
Recent final regulations offer guidance as to what Treasury and the IRS may consider an eligible method for partnerships and Sec. 987 QBUs held by partnerships to determine Sec. 987 gain or loss.
New IRS form for partners receiving property distributions
Form 7217, Partner’s Report of Property Distributed by a Partnership, debuted for 2024, intended to apprise the IRS of factors in a partner’s basis computation.
Strategies for information return penalties and Form 945 assessments
Penalties for failure to file correct information returns and backup withholding can be waived, but timely and correct responses to IRS notices are essential.
Using the IRS’s BBA Online Form Submission Service
To request a modification to an imputed underpayment from a Bipartisan Budget Act audit or push out the underlying adjustment, audited partnerships must use the IRS’s web-based service.
Expenses that could have been substantiated not allowed
The Cohan rule for estimating business deductions did not apply where taxpayers could have substantiated them but failed to do so, the Tax Court held.
IRS grants partnerships additional time to furnish complete Forms 8308
The IRS is providing relief from penalties imposed solely for failure to furnish Part IV of Form 8308 for partnerships by Jan. 31, 2025, if a partnership meets certain requirements.
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.
LLC validly elected into BBA partnership examination regime
To make a valid election into the Bipartisan Budget Act’s audit procedures, the IRS could not require the taxpayer to establish, as opposed to represent, that it had sufficient assets to pay any imputed underpayment, the Tax Court held.
State considerations for BBA exams and adjustments
States vary in their treatment of partnership adjustments made under the centralized partnership audit regime instituted by the Bipartisan Budget Act of 2015.
The past, present, and future of the BBA partnership audit regime
The Bipartisan Budget Act streamlined the partnership audit and adjustment processes, but uncertainties remain.
Sec. 6603 deposits under the BBA audit regime
While the deposits can limit interest due on imputed underpayments under the centralized audit regime of the Bipartisan Budget Act of 2015, ambiguities remain, including for push-out elections.
Filing an administrative adjustment request under the BBA
Partnerships’ administrative adjustment requests filed under the Bipartisan Budget Act rules can affect partners in disparate ways, including where adjustments flow through a tiered structure.
What accountants need to know about the BBA
Partnerships do well to consider available elections and the power that partnership representatives wield under the audit procedures of the Bipartisan Budget Act of 2015.
A look at revised Form 8308
The newly expanded form can help transferors of partnership interests meet reporting requirements involving Sec. 751(a) “hot assets” gain or loss, collectibles gain, and unrecaptured Sec. 1250 gain.
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.
IRS scrutinizes use of the SECA limited partner exception
In a compliance campaign and litigation, the IRS challenges partners’ claims of the Sec. 11402(a)(13) exception from Self-Employed Contributions Act employment tax liability.
Penalties against LLC approved by IRS supervisor, Tax Court holds
In Salacoa Stone Quarry, LLC, the Tax Court held that penalties for misstatement of a charitable conservation easement’s value were properly approved by an IRS supervisor, despite a discrepancy in dates on the penalty approval documents.
Beneficial ownership information reporting: Right around the corner
Clients should start developing procedures and policies to comply with the new reporting requirement and begin to gather the data that will be necessary.
Ninth Circuit again addresses return filing
Faxing a return copy to an IRS agent or mailing it to an IRS attorney is not ‘filing’ the return.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
