Contributions, Distributions & Basis

Chief Counsel Advice Tackles Sec. 752’s Impact on Partnership COD Income

IRS Chief Counsel Advice interpreted whether Sec. 752 should be used to determine whether a partnership’s debt is recourse or nonrecourse for purposes of COD income rules.

Identifying a Partnership Distribution

A partnership distribution may consist of cash, property, or both. In addition, any reduction of a partner’s share of partnership liabilities is treated as an actual distribution of cash.

Notice Contains Rules on Gain Recognition for Property Transferred to Foreign Partnerships

The IRS intends to issue regulations under Sec. 721(c) to ensure that a U.S. person recognizes gain either immediately or periodically when it transfers certain property to a partnership that has foreign partners related to the transferor.

The Tax Adviser 2014 Best Article Award

James M. Greenwell received the award for his article on Sec. 704(c) Allocations.

Is It Rent? That Depends on the Lease

A recent Tax Court decision sheds light on the importance of lease terms to determine what is rent and how Sec. 467 may apply to advance rents.

Making a Valid Sec. 754 Election Following a Transfer of a Partnership Interest

It is not uncommon for a partnership to attempt to make a valid Sec. 754 election, only to find that it failed to satisfy regulatory requirements.

Tax Considerations for Cancellation-of-Debt Income

This item provides an overview of the U.S. income tax implications of cancellation-of-debt income that results from bankruptcy or insolvency, with a focus on the differences in the tax treatment for C corporations, S corporations, and partnerships.

Identifying What Constitutes Partnership Liabilities and How They Affect the Basis of Partnership Assets

Only partnership debt that has an impact on the partnership’s inside basis is a liability. All other debt is excluded from consideration.

Proposed Regulations Would Require Gain or Loss Recognition on Certain Installment Obligation Transfers

The IRS issued proposed regulations that would require transferors that transfer installment obligations for equity interests in corporations or partnerships in nonrecognition transactions in satisfaction of those obligations to recognize gain or loss.

The Transfer of Loss Property Between an S Corporation and Its Shareholders

S corporations and their shareholders often engage in transactions in which they transfer property with a basis greater than its FMV. This article examines the tax effects on both shareholders and the corporation.

Transfers of Installment Obligations Would Trigger Gain or Loss Under Proposed Rules

The IRS issued proposed regulations relating to the nonrecognition of gain or loss on certain dispositions of an installment obligation.

S Corp. Shareholder Basis and Debt

The IRS issued final regulations addressing the basis of indebtedness of S corporations to their shareholders.

Navigating the Net Investment Income Tax: Key Issues for Investment Funds and Their Partners

This item summarizes the aspects of the net investment income tax that are most relevant to hedge fund investors and general partners.

The Limited Liability Company Basis Limitation

Under Sec. 704(d), a member’s allocable share of loss from a limited liability company (LLC) taxed as a partnership is deductible only to the extent of the member’s outside basis in his or her LLC interest at the end of the LLC year. In determining a member’s outside basis at year end, adjustments for increases and decreases are made in a specific order according to Regs. Sec. 1.704-1(d)(2).

Computing the Domestic Production Activities Deduction for Passthrough Entities

Some unique issues can arise when computing the domestic production activities deduction for a passthrough entity.

Final Rules Issued on Bona Fide Indebtedness and Terminating Partnership’s Startup Expenses

Final regulations were issued on S corporation shareholder basis of indebtedness of the S corporation to the shareholder only if the indebtedness is bona fide and on the deductibility of startup expenditures and organizational expenses for partnerships following a termination of a partnership.

Current Developments in Partners and Partnerships

This article reviews and analyzes recent rulings and decisions involving partnerships. The discussion covers developments in partnership formation, income allocations, and basis adjustments

Determining the Taxability of S Corporation Distributions: Part II

This article covers the taxability of distributions from an S corporation with accumulated E&P and ancillary issues and planning opportunities.

Partnership Basis Rules Proposed

The IRS issued proposed regulations providing guidance on the application of Sec. 704(c)(1)(C) added by the American Jobs Creation Act and the amendments to the mandatory basis adjustment rules of Sec. 743 in the AJCA.

Proposed Rules Would Require Terminating Partnerships to Amortize Startup Expenditures

The IRS issued proposed regulations aimed at preventing partnerships from using technical terminations to accelerate their deductions of startup and organizational expenses.
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