1. Topics

S Corporation, Partnership & LLC Taxation

BOI requirements roll along despite concerns about too little outreach

FinCEN, which oversees beneficial ownership information reports, has received just 2.7 million of the 32.6 million reports that it expects. Through June, FinCEN said, it has reached more than 90,000 stakeholders.

Foreign partnership reporting requirements

U.S. persons owning an interest in a foreign partnership may be required to file Form 8865, and the partnership may also face additional U.S. filings.

The past, present, and future of the BBA partnership audit regime

The Bipartisan Budget Act streamlined the partnership audit and adjustment processes, but uncertainties remain.

Partnership elected BBA procedures; TEFRA FPAA invalid

An early election into the partnership audit regime of the Bipartisan Budget Act was valid under the regulations, the Tax Court held.

Partnership distributions: Rules and exceptions

Although the general rules for how partners are taxed on distributions are relatively straightforward, many subtleties and exceptions can lead to missteps.

The double-tax consequences of an S corporation subject to BIG tax

A corporation’s built-in gains (BIG) tax cost of disposing of assets in liquidation within five years after its S election can be substantial.

FinCEN estimates millions of hours will be spent seeking BOI access

Almost 16,000 entities will spend over 8.7 million hours seeking access to beneficial ownership information in the first year, FinCEN estimated in a new notice.

Final regs. issued for 1% excise tax on corporate stock repurchases

The final regulations provide guidance regarding the reporting and payment of the excise tax on repurchases of corporate stock made after Dec. 31, 2022.

Recapture considerations for Inflation Reduction Act credits

The Inflation Reduction Act not only created $663 billion in new energy-related credits over 10 years, but it also expanded opportunities to monetize many of the energy tax credits through direct payment and transfer elections.

The BBA’s ‘ceases-to-exist’ rule in partnership termination transactions

Under the centralized partnership tax audit regime of the Bipartisan Budget Act of 2015, a buyer of a partnership interest can take certain steps to avoid a potential tax exposure related to uncertain tax positions for preacquisition tax years.

Partners’ basis on the liquidation of an insolvent partnership

When an insolvent partnership liquidates, determining the partners’ tax bases in the property they receive may be difficult due to the operation of Sec. 752(c).

Sec. 6603 deposits under the BBA audit regime

While the deposits can limit interest due on imputed underpayments under the centralized audit regime of the Bipartisan Budget Act of 2015, ambiguities remain, including for push-out elections.

Current developments in S corporations

This annual update covers recent developments relating to S corporations including IRS relief for common inadvertent S election lapses; state passthrough entity taxes; and other cases, rulings, and regulations.

Final regs. issued on conservation easement deduction disallowance

The IRS on Monday issued final regulations providing guidance on the new rule that disallows charitable contribution deductions for certain conservation easement contributions by partnerships and other passthrough entities.

Supreme Court issues narrow opinion upholding Sec. 965 transition tax

The Supreme Court upheld the mandatory repatriation tax as a valid exercise of Congress’s taxing authority. The Court did not reach the question of whether income must be realized to be taxable.

IRS moves to end ‘shell game’ of basis-shifting transactions

The Service said it will release new proposed regulations and a revenue ruling to challenge the use of basis-shifting transactions used by complex partnerships in moves that could add over $50 billion to government coffers over 10 years.

Filing an administrative adjustment request under the BBA

Partnerships’ administrative adjustment requests filed under the Bipartisan Budget Act rules can affect partners in disparate ways, including where adjustments flow through a tiered structure.

Calculating an LLC member’s amount at risk

Understanding the amount and composition of an LLC member’s amount at risk is crucial to determining the Sec. 465 limitation on losses that may be claimed.

Making sense of nonrecourse deductions in partnership taxation

Allocations to a partner may follow the partnership agreement or, where they lack substantial economic effect, be in accordance with the partner’s interest in the partnership. Special considerations apply to the allocation of nonrecourse deductions, i.e., losses, deductions, or expenditures attributable to nonrecourse liabilities.

Limited partners and self-employment tax: A new test

The Tax Court recently held in Soroban Capital Partners that to determine whether a limited partner’s partnership distributive share is excluded from self-employment tax under Sec. 1402(a)(13), an analysis of the partner’s actual functions and roles is required. This article discusses what that analysis should entail and offers tax planning tips.
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