Contributions, Distributions & Basis

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.

Current Developments in Partners and Partnerships

This article reviews and analyzes recent rulings and decisions involving partnerships.

Excise and Employment Tax Treatment of Disregarded Entities Clarified

The IRS issued final regulations clarifying the treatment of disregarded entities with respect to employment and certain excise taxes.

Religious and Family Member FICA and FUTA Exceptions Extended to Disregarded Entities

The IRS issued temporary and proposed regulations that extend the religious and family member FICA and FUTA tax exceptions to disregarded entities.

IRS Proposes New Treatment of LLC Members, Limited Partners Under Passive Loss Rules

The IRS issued proposed regulations that would redefine “interest in a limited partnership as a limited partner” for purposes of determining material participation under the Sec. 469 passive loss rules.

Current Developments in S Corporations (Part II)

This article provides an annual update of recent IRS rulings, guidance, and other developments concerning S corporations. It discusses S corporation eligibility, elections, termination issues, second class of stock, and trusts owning S corporation stock.

Regs. Extend Religious and Family Member FICA, FUTA Exceptions to Disregarded Entities

Temporary and proposed regulations extend the religious and family member FICA and FUTA tax exceptions to disregarded entities.

Final Regs Clarify Excise, Employment Tax Treatment of Disregarded Entities

The IRS issued final regulations clarifying the treatment of disregarded entities with respect to employment and certain excise taxes.

Sec. 179D and Passthrough Entities

The Sec. 179D deduction available for building designers has unexpected consequences for design firms structured as passthrough entities.

Final Regs. Govern Election to Deduct Business Start-up Expenses

The IRS issued final regulations (T.D. 9542) governing elections by individual taxpayers, corporations, and partnerships to deduct start-up expenses or organizational expenditures.

Election to Deduct Business Startup Expenses Gets Final Rules

The IRS issued final regulations governing elections by individual taxpayers, corporations and partnerships to deduct startup expenses or organizational expenditures.

Separately Identifiable Intangible Assets: Tax Opportunities and Traps

Treating self-created customer-based intangibles as assets separate from goodwill can result in more favorable tax treatment for these intangibles. This article examines the rules regarding the separate treatment of self-created customer-based intangibles and the situations in which separate treatment may be beneficial.

Partners’ Limited Liability and Self-Employment Tax

The decision in Renkemeyer, Campbell & Weaver, LLP, signals that special allocations not supported by a written partnership agreement and without substantial economic effect will not withstand an IRS challenge and that classification of an interest in a partnership as a limited partner interest should not be predicated simply on a partner’s enjoyment of limited liability.

Discharge of Indebtedness Rules Clarified for Grantor Trusts and Disregarded Entities

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

Split Widens as Courts Hold Basis Overstatement Is Not Income Omission

The ongoing controversy over whether a taxpayer’s overstatement of basis triggers a six-year statute of limitation period continues as the Fourth Circuit and Fifth Circuit both held within days of each other that the extended period does not apply. These decisions are at odds with a Seventh Circuit opinion issued in January and with regulations finalized in December.

Overstatement of Basis Is Not Omission from Gross Income, Appeals Court Rules

A federal appeals court has handed the IRS another defeat on the issue of whether an overstatement of basis amounts to an omission from gross income for purposes of invoking the longer, six-year limitation period for assessing tax under Sec. 6501(e).

Another Circuit Says Overstatement of Basis Is Not an Omission from Gross Income

The ongoing controversy over whether a taxpayer’s overstatement of basis triggers a six-year statute of limitation period continues as the Fourth Circuit has held that the extended period does not apply.

Current Developments in Partners and Partnerships

This article reviews and analyzes recent rulings and decisions involving partnerships. The discussion covers developments in partnership formation, debt and income allocations, distributions, passive activity losses, and basis adjustments during the period November 1, 2009–October 31, 2010.
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