1. Topics

S Corporation, Partnership & LLC Taxation

Sec. 1446(f) regulations: The rules and unanswered questions

This article addresses certain aspects of the withholding rules of the final Sec. 1446(f) regulations, options to eliminate or reduce Sec. 1446(f) withholding, and some outstanding issues.

Debt workouts involving commercial real estate

As short-term agreements that borrowers and creditors reached at the beginning of the pandemic start to expire, real estate companies and others will need to find long-term solutions to their insolvency problem.

Current developments in partners and partnerships

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

Partnership interests, Sec. 465 at-risk limit, and Form 6198

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.

IRS issues final rules on the treatment of carried interests

The IRS finalized proposed regulations on certain carried interests to account for changes made by the TCJA.

Avoiding gain at the S shareholder level when a loan is repaid

When the basis in an S shareholder’s loan to the S corporation has been reduced by passthrough losses, repayment of the loan may be a taxable event.

AICPA asks for guidance on S corp. and partnership PPP loan forgiveness

In a letter dated March 15, the AICPA asked for IRS guidance on how S corporations and partnerships should treat tax-exempt income from PPP loan forgiveness, especially when it occurs during a different tax period.

When does the centralized partnership audit regime not apply to partnership-related items?

Proposed regulations provide that the IRS may determine that the centralized partnership audit regime does not apply to adjustments to partnership-related items under certain conditions.

Top-of-market valuation for conservation easement upheld

A donated conservation easement has top-of-market value.

IRS releases new draft form to request revocation of Sec. 754 election

The form has been developed due to an increase in Sec. 754 election revocation applications since the technical termination of a partnership under former Sec. 708(b)(1) (B) was repealed under the TCJA.

Ensuring that allocations of LLC tax items are respected

If LLC members’ tax allocations are not made in accordance with the members’ interests in the LLC, they must fit into the substantial-economic-effect safe harbor.

IRS memorandum illustrates application of Sec. 704(c) anti-abuse rule

In FAA 20204201F, the IRS concluded that the Sec. 704(c) allocation method adopted by a partnership between a U.S. corporation and its domestic and foreign affiliates was unreasonable under the Sec. 704(c) anti-abuse rule.

Bridging the gap: GILTI and AAA

IRS Notice 2020-69 provided a new entity election that allows an S corporation to compute the deemed inclusions at the entity level, as opposed to at the shareholder level. This item provides background on the new election, illustrates its effects, and highlights opportunities and traps to consider when contemplating the election.

Partner capital account reporting gets transition penalty relief

Errors by partnerships in reporting partners’ tax capital accounts under new rules for 2020 may be excused, the IRS outlined.

Carried interests regulations are finalized

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.

Proposed regs. on carried interests

This item discusses proposed regulations regarding the tax treatment of carried interests.

Draft instructions for reporting partnership capital accounts are issued

The IRS released draft instructions for Form 1065 to calculate partner capital accounts using the tax-basis method.

Rules issued on transfers of partnership interests and effectively connected income

The IRS finalized proposed regulations on withholding from transfers of partnership interests to foreign persons and the definition of effectively connected income for those purposes.

IRS finalizes rules on eligible terminated S corporations

The IRS issued final regulations on ETSCs and distributions of money from those corporations after the post-termination transition period.

The built-in gains tax

The built-in gains tax applies to C corporations that make an S corporation election, and it can be assessed during the five-year period starting with the first tax year for which the S election is effective.
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