1. Topics

S Corporation, Partnership & LLC Taxation

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.

IRS Proposes Eliminating De Minimis Partner Rule

The IRS issued proposed regulations on October 24 that, if finalized, would remove the de minimis partner rule in Regs. Sec. 1.704-1(b)(2)(iii)(e) (REG-109564-10).

The Targeted Allocations Approach: A Basic Primer

This item discusses a growing trend in the allocation provisions of partnership agreements in which limited partnerships have been adopting a targeted allocation approach through which “tax follows cash.”

QSSTs and ESBTs: No Longer Mutually Exclusive

Under Letter Ruling 201122003, if a current ESBT allows for separate and independent trust shares under the trust document, a trust may be treated as both an ESBT and a QSST. This ruling opens the door for additional planning for gifts of S corporation stock to younger generations.

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.

Current Developments in S Corporations (Part I)

This two-part article discusses in the S corporation area. Part I covers new tax laws, court cases, regulations, revenue procedures, and rulings on various S corporation administrative and operating provisions.

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.

S Corporation Shareholder Compensation: How Much Is Enough?

This article looks at recent court decisions regarding S corporation shareholder reasonable compensation that provide helpful guidance on how an adviser can determine what is reasonable compensation.

Changing Level of Participation in an S Corporation for Tax Planning Purposes

A shareholder materially participates in an S corporation if the shareholder or the shareholder’s spouse is involved in the corporation’s trade or business on a regular, continuous, and substantial basis. This column discusses three tests that practitioners are likely to encounter when dealing with S corporation shareholders.

Partnership Determination of Eligible Basis for Energy Grants

This item discusses whether a partnership should take a partner’s Sec. 743(b) adjustment into account in determining eligible basis of qualified energy property that the partnership has not yet placed in service.

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.

IRS Finalizes Automatic Five-Month Extension for Partnership, Trust and Estate Returns

Final regulations set the time for automatic extensions of partnership, trust and estate income tax returns at five months (T.D. 9531). Under this rule, the extended returns and Schedules K-1 for partners and beneficiaries will generally be due September 15.

Case Addresses the Sec. 752 Anti-Abuse Regs.

The recent decision of the Tax Court in Canal Corp. may provide some insight into when a partner’s potential obligation to pay partnership debts will be disregarded in determining liability allocations.

S Corporation Reasonable Compensation

A recent district court decision highlights the employment tax risks to S corporations that are found to have paid unreasonably low compensation to shareholder-employees while making distributions to the same individuals.

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.

Target Allocations

This item discusses what target allocations are and how they determine income allocations during a year. It also examines some special issues with target allocations.

Did Canal Corp. Sink the Leveraged Partnership Transaction?

This item reviews the recent decision by the Tax Court in Canal Corp. and illustrates the limitations of the leveraged partnership exception to the disguised sale rules of Sec. 707(a)(2)(B).
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