Contributions, Distributions & Basis

Sec. 754 and Ground Leases

A partnership making an optional Sec. 754 basis adjustment for land subject to a long-term ground lease is permitted to adjust the basis of the land but may not allocate the basis adjustment to buildings or other depreciable assets the lessee constructed.

Debt and Proving Basis in Flowthrough Entities

A taxpayer’s basis is often scrutinized by the IRS, particularly when basis is claimed based upon debts incurred by a flowthrough entity.

Current Developments in S Corporations

This article discusses major changes and developments that directly affect S corporations and their tax advisers during the period of this update (July 10, 2012–July 9, 2013).

QSub Status Is Not Property of Bankruptcy Estate

An S corporation’s revocation of its S corporation status, which caused its QSub subsidiary to lose its status as a QSub, was not a post-bankruptcy-petition transfer of property of the QSub’s bankruptcy estate.

QSub Election Does Not Increase Shareholder Stock Basis

The Tax Court held that shareholders of an S corporation improperly increased the adjusted basis of their S corporation stock when the S corporation made a QSub election for its wholly owned C corporation subsidiary.

Defining “Attributable to” Under Sec. 897(g)

The lack of regulatory and published guidance has created uncertainty in applying Sec. 897 to determine the amount of gain attributable to a USRPI.

Incorporating an Insolvent Partnership: Availability of the Insolvency Exclusion

Incurring COD income at the partnership level may provide significantly different, and potentially detrimental, tax results to owners in a partnership than would incurring COD income at the corporate level.

Deducting S Corporation Losses to Extent of Shareholder Basis

An S corporation shareholder reports corporate income or loss on the personal income tax return for the year in which the corporate year ends; losses or deductions passed through to the shareholder first reduce stock basis, then loss amounts are applied against debt basis.

Partners’ Income Allocations and the New Net Investment Income Tax

The health care acts, along with recently issued Treasury guidance on the applicability of the additional Medicare tax, may prompt partnerships to reevaluate the potential tax impact of the partnership’s structure on their individual partners.

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.

Debt Discharge Under Sec. 108: Partnerships vs. S Corps.

As tax liability for COD income gives many taxpayers an unpleasant surprise in today’s economy, its tax treatment continues to be a focal point for tax professionals in tax planning and preparation.

Organizational and Startup Costs for Single-Member LLCs

Despite the widespread use of single-member LLCs, some confusion still exists regarding the tax treatment of the initial expenditures to form and operate this type of entity.

Measuring Insolvency Under Sec. 108

While determining if a taxpayer is bankrupt is straightforward, determining whether a taxpayer is insolvent can be tricky.

Timing a Loss Deduction

When a real estate venture is structured so that one partner provides the capital and the second provides operational experience, how are losses incurred by the capital partner treated?

Current Developments in S Corporations

During the period of this S corporation tax update, some major changes that directly affect S corporations took place. This article also presents tax planning ideas for S corporations and their shareholders.

S Corporation Shareholder Basis From Bona Fide Indebtedness

The IRS issued proposed regulations on the subject of when an S corporation shareholder can increase his or her basis in the S corporation’s stock based on loans to the corporation.

Contributions Increase Shareholders’ S Corporation Basis

The Tax Court held that shareholders in two related S corporations could increase their basis in one of the corporations by contributing assets to it that they had received in a distribution from the other corporation.

PTPs Can Use Safe Harbor to Determine COD Income That Is “Qualifying Income”

The IRS issued a safe harbor for publicly traded partnerships (PTPs) that want to avoid corporate taxation by qualifying under Sec. 7704(c) as partnerships with 90% or more of their income from qualifying sources.

Proposed Regs. on Basis for S Corporation Shareholders From Bona Fide Indebtedness

The IRS issued proposed regulations on when an S corporation shareholder can increase basis in the S corporation’s stock based on loans to the corporation.

Final Partnership Debt-for-Equity Regulations

The IRS issued final regulations that provide guidance on the recognition of discharge of indebtedness income in partnership debt-for-equity transfers.
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