Contributions, Distributions & Basis

Tax Court denies ordinary abandonment losses in taxpayers’ disposition of partnership interests

Tax Court affirmed the IRS’s decision to recharacterize loss of a partnership disposition from ordinary to capital when the taxpayers failed to provide evidence of abandonment.

IRS permits partnership basis election without partner’s signature

To ease the regulatory burden on partnerships, the IRS announced that it is eliminating the requirement that partnership elections under Sec. 754 be signed by a partner.

Practitioner’s incorrect change to passive status costly

A preparer’s improper change of status of income from active to passive is costly for taxpayers.

The importance of tracking AAA and E&P in transactions involving S corps.

Tracking these accounts is important if an S corporation enters into certain transactions such as redemptions, liquidations, reorganizations, or corporate separations.

Temporary disguised-sale regulations raise concerns

Should the IRS consider recognizing a contributing partner’s economic risk of loss when the regulations are finalized?

Recent regs. significantly change taxation of certain partnership contributions

Treasury and the IRS issued regulations that generally override nonrecognition treatment for certain contributions of property to partnerships.

The trust fund recovery penalty and LLCs

A responsible person may be subject to the TFRP if it can be shown he or she willfully failed to pay the trust fund taxes due.

Election to group activities for purposes of passive activity loss rules

The Tax Court held that a taxpayer had not elected to group two activities together under the passive activity loss rules simply by treating both activities as nonpassive.

Sec. 743(b) adjustment complications in multitier partnerships

Sec. 743(b) adjustments are complex, and multitier partnership structures only exacerbate that complexity.

Current Developments in Partners and Partnerships

This article reviews and analyzes recent law changes as well as rulings and decisions involving partnerships.

Basis for “Bad Boys”

Including “bad boy” provisions in loan agreements is a common practice to protect the lender in the commercial real estate finance industry.

Advantages of an Optional Partnership Basis Adjustment

The optional basis adjustment election is an attempt to allow partners to correct certain discrepancies by affecting a transferee’s allocable basis in the underlying partnership assets.

How the COD Rules Apply to Grantor Trusts and Disregarded Entities

New regulations provide rules for determining who is the “taxpayer” for purposes of applying the Sec. 108 discharge-of-indebtedness rules to a grantor trust or disregarded entity.

Recognizing When a Disguised Sale of Property Takes Place

Property transfers between a partner and a partnership are considered to be a taxable sale of the property under certain circumstances.

Final Regulations Clarify COD Rules for Grantor Trusts and Disregarded Entities

The IRS finalized regulations that provide rules for determining who is the “taxpayer” for purposes of applying the Sec. 108 discharge-of-indebtedness rules to a grantor trust or disregarded entity.

Regulations Clarify: Partners Cannot Be Employees

The IRS issued temporary regulations clarifying that partners in a partnership that owns a disregarded entity cannot be treated as employees of the disregarded entity.

Taxation of Worthless and Abandoned Partnership Interests

This article discusses the tax treatment of worthless or abandoned stock and partnership interests.

Current Developments in Partners and Partnerships

This article discusses developments in income allocations, disguised sales, partnership distributions, terminations, and basis adjustments.

Regulations Forthcoming on Partnership Nonrecognition of Property Contributions

The regulations would create an exception to the general nonrecognition rule for property contributions to a partnership in exchange for a partnership interest.

Calculating Basis in Debt

Direct shareholder loans to an S corporation can be very important tools for tax planning.
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