1. Topics

S Corporation, Partnership & LLC Taxation

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.

Complications in Sec. 743(b) substituted basis transactions

Rules for allocating resulting adjustments among partnership assets can be challenging, especially with respect to a transferee partner.

Updated FAQs provide details on phase-in timing of BOI access

The FAQs from Treasury’s Financial Crimes Enforcement Network said access to beneficial ownership information will be phased in, beginning this spring with a pilot program for some federal agency users and concluding in spring 2025, when financial institutions with customer due-diligence requirements will be able to review BOI.

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

Two sets of proposed regulations issued by the IRS provide guidance on the implementation of the new excise tax and on rules for the procedure and administration applicable to the reporting and payment of the tax.

AICPA: BOI ruling confuses businesses; enforcement should be delayed

In a letter to the Treasury secretary and the FinCEN director, the AICPA called for enforcement of beneficial ownership information reporting regulations to be suspended until after lawsuits are settled.

What accountants need to know about the BBA

Partnerships do well to consider available elections and the power that partnership representatives wield under the audit procedures of the Bipartisan Budget Act of 2015.

Recognizing transactions that trigger built-in gains or losses

Various types of transactions can cause an S corporation to incur built-in gains or losses, including Sec. 481 adjustments from a change in accounting method.

Decision holding Corporate Transparency Act unconstitutional appealed

The U.S. Justice Department filed an appeal Monday challenging the district court’s decision that the law, which requires businesses to report beneficial ownership information, is unconstitutional.

Plaintiffs: FinCEN should pause all CTA enforcement

The plaintiffs who won a summary judgment that bars enforcement of the Corporate Transparency Act against them said the Financial Crimes Enforcement Network should pause beneficial ownership information reporting requirements for all businesses.

Federal court holds Corporate Transparency Act unconstitutional

While acknowledging that the law is well intentioned, the opinion from a U.S. district court in Alabama said Congress lacked authority to enact the business ownership information reporting requirement.
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