1. Topics

S Corporation, Partnership & LLC Taxation

Signing partnerships’ returns and other tax documents

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.

Deferring gain in liquidation with an installment sale and noncompete agreement

Liquidating S corporations may defer corporate-level gain by distributing a qualifying installment obligation arising in a 12-month liquidation period; a planning strategy pairs this exception with a noncompete agreement.

Guidance on research or experimental expenditures under H.R. 1 issued

The revenue procedure advises taxpayers how to make various elections, file amended returns, and change accounting methods as provided under Section 70302 of the new law.

Prop. regs. would modify reporting obligations for Form 8308, Part IV

The IRS issued proposed regulations that would modify partnerships’ reporting obligations for Part IV of Form 8308 with respect to sales or exchanges of certain interests in partnerships owning inventory or unrealized receivables.

AICPA presses IRS for guidance on domestic research costs in OBBBA

In its letter, the AICPA said small businesses that have not filed returns for the 2024 filing period face uncertainty about how to treat domestic research and experimental expenditures.

IRS includes several AICPA recommendations in corporate AMT interim guidance

In a notice issued Tuesday, the IRS said it intends to partially withdraw proposed regulations and issue revised proposed regulations.

Current developments in S corporations

This annual update covers recent developments relating to S corporations, including IRS relief for common inadvertent S election lapses; the transfer of clean-energy credits; and other cases, rulings, and regulations.

Potential recapture pitfall for profits-interest partners

Allocations under Regs. Sec. 1.1245-1(e)(2)(i) may result in profits-interest partners being allocated ordinary income even though they were not previously allocated any depreciation or amortization deductions.

Distributions of Sec. 704(c) property by an LLC

A member that contributes Sec. 704(c) property (property with a basis different than fair market value (FMV) when contributed) to a limited liability company (LLC) classified as a partnership may be required to recognize gain or loss if that property is later distributed to another member. Under Sec. 704(c)(1)(B), a distribution of

Powers of attorney for partnerships

Rules for signing the power-of-attorney form vary widely between partnerships audited under the Bipartisan Budget Act of 2015 (BBA) versus those under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA).

AICPA proposes changes to Senate bill that would help most US businesses

Passthrough entities would lose ground compared with corporations under tax language in the Senate Finance Committee bill, the AICPA said in a letter to legislative finance leaders.

AICPA makes Priority Guidance Plan recommendations to IRS

In addition to its 183 recommendations for the IRS plan, the AICPA encouraged the agency to continue to pursue tax simplification.

Simplified method to determine corporate AMT applicable status issued

A notice issued by the IRS with interim guidance for the application of the corporate alternative minimum tax offers an optional simplified method for determining applicable corporation status under Sec. 59(k).

Partnership reporting of contributions to foreign entities

Substantial penalties may be imposed if a taxpayer fails to report contributions to foreign entities.

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.

Sec. 541: A trap for the unwary investment partnership

The 20% personal holding company tax may unexpectedly apply to an investment partnership.

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.

How S elections go wrong and how to fix them

Problems with S elections frequently cause them to be invalid when made or to terminate. This article discusses four of the most common ones and three revenue procedures that may enable S corporations to fix them without obtaining a costly letter ruling.

Reconciliation bill clears committee on second try

Sunday revote came after Republican fiscal hawks initially joined Democrats to sink the bill, which includes tax provisions approved by the House Ways and Means Committee last week.

Ways and Means approves proposed TCJA extensions and tax changes

The bill would make key portions of the TCJA permanent and create a new “senior bonus” deduction, among its many provisions. An AICPA statement said it is “deeply troubled” by the plan to curtail use of passthroughs to avoid SALT cap. The bill now heads to the House Budget Committee.
Next