In Musselwhite, T.C. Memo. 2022-57, the Tax Court held that a taxpayer’s losses from the sale of four lots (real property) were ordinary in nature, as opposed to capital.
Contributions, Distributions & Basis
An LLC member’s distributive share of LLC income and loss from a trade or business is generally subject to self-employment tax, raising several issues around guaranteed payments, retirement payments, rental income, and members who are employees of the LLC.
For certain partners, the presumed preference for receiving a distributive share of income (including a priority profit allocation) may need further evaluation to determine how it coordinates with various international tax provisions.
This item considers to what extent taxpayers may be able to apportion basis instead under Sec. 704(c) principles.
Generally, a trust cannot hold stock of an S corporation; however, grantor trusts, testamentary trusts, voting trusts, ESBTs, and QSSTs are permissible S corporation shareholders (Sec. 1361(c)(2)).
AAA and AE&P calculations are key to determining stock basis and, thus, the taxability of shareholder distributions.
stock and debt basis under Sec. 1366(d)(1). Failing to properly track basis may require a recomputation of the shareholder’s basis.
When an LLC interest is transferred, the transferee’s basis depends on the transferor’s basis and numerous other potential factors.
The discussion covers developments in the determination of partners and partnerships, gain on disposal of partnership interests, partnership audits, and basis adjustments.
Partnerships and their partners need to work closely to maintain strong communications to overcome challenges to information sharing and, ultimately, to computational matters and information reporting.
Economic benefits from a compensatory split-dollar life insurance arrangement are not property distributions.
This article focuses on the Sec. 465 at-risk limitation, one of the rules that could disallow all or part of a partner’s deduction of an allocable loss from a partnership.
The IRS finalized proposed regulations on certain carried interests to account for changes made by the TCJA.
The IRS finalized proposed regulations on certain carried interests to account for changes made by the Tax Cuts and Jobs Act (TCJA). The TCJA extended from one year to three years the holding period for making carried interests eligible for capital gain treatment.
This item discusses proposed regulations regarding the tax treatment of carried interests.
The president and a director of a not-for-profit is not its beneficial owner and cannot be a shareholder of it.
The IRS issued proposed regulations under Sec. 1061, enacted by the TCJA, which requires owners of certain partnership interests to hold them for three years to be eligible for capital gain treatment.
Payments to ex-wife and divorce lawyer do not increase taxpayer’s basis in an LLC.
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.
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.