1. Topics

S Corporation, Partnership & LLC Taxation

IRS scrutinizes use of the SECA limited partner exception

In a compliance campaign and litigation, the IRS challenges partners’ claims of the Sec. 11402(a)(13) exception from Self-Employed Contributions Act employment tax liability.

A $10.7 million compensation deduction miss

The recent Hoops decision by the Seventh Circuit, affirming the Tax Court, highlights potential problems for accrual-basis employers of claiming a deduction of nondeferred compensation following mergers and acquisitions.

Current developments in partners and partnerships

This annual update reviews court rulings and guidance on issues including debt and income allocations, distributions, and basis adjustments.

Converting a sole proprietorship to an LLC

The conversion affords the advantage of limited liability, often with minimal changes in federal tax treatment.

Digital asset question added to more forms for 2023 tax returns

IRS adds a question about digital assets to forms covering partnerships, corporations, S corporations, and estates and trusts.

Final rule issued on access to beneficial ownership information

The director of the Financial Crimes Enforcement Network said the key changes from the proposed rule involve the scope of financial institution access to beneficial ownership information; limitations on offshore access to BOI; and streamlining procedures for state, local, and tribal law enforcement to gain access to BOI.

Interim guidance provided for the corporate alternative minimum tax

The IRS issued a notice on regarding the application of the corporate alternative minimum tax to shareholders of CFCs and to affiliated groups of corporations filing consolidated returns.

Missed Sec. 83(b) elections: Partnership and LLC special issues

This discussion focuses on grants of profits interests in a partnership or LLC and the relevance of Sec. 83(b) elections.

FinCEN extends BOI reports deadline for certain companies

Treasury’s Financial Crimes Enforcement Network extended the deadline to file beneficial ownership information reports from 30 days to 90 days for companies created or registered in 2024.

Prop. regs. issued on conservation easement deduction disallowance

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

FinCEN will allow use of identifier in beneficial ownership reporting

Treasury’s Financial Crimes Enforcement Network (FinCEN) made changes to its beneficial ownership information reporting rule in response to comments to a proposed rule.

Penalties against LLC approved by IRS supervisor, Tax Court holds

In Salacoa Stone Quarry, LLC, the Tax Court held that penalties for misstatement of a charitable conservation easement’s value were properly approved by an IRS supervisor, despite a discrepancy in dates on the penalty approval documents.

AICPA, others call for a one-year extension of BOI report deadline

In a letter to Treasury’s Financial Crimes Enforcement Network, the AICPA says the additional time will give all businesses a fair and reasonable time frame to become aware of the new and complex rule.

FinCEN continues outreach on BOI reporting, may release YouTube videos

The new head of the Financial Crimes Enforcement Network said the online videos, which she used in her previous government position, are among the communication options being considered to inform companies about beneficial ownership information reporting requirements.

LLC distributions that liquidate a member’s interest

Factors potentially causing taxable gain (or loss) from a liquidating distribution include the member’s outside basis and the nature of any property the member contributed to the LLC.

Beneficial ownership information reporting: Right around the corner

Clients should start developing procedures and policies to comply with the new reporting requirement and begin to gather the data that will be necessary.

Special per diem rate for business travel rises

Starting Oct 1, 2023, the special per diem rates taxpayers may use to substantiate ordinary and necessary business expenses for travel away from home will go up, the IRS announced.

FinCEN posts guide to help small businesses with BOI reporting

A new guide posted by the Financial Crimes Enforcement Network describes BOI rules, answers questions, and provides tools to assist with compliance with the BOI reporting rules.

Guidance issued on applicability and calculation of new corporate AMT

In advance of proposed regulations, the IRS provided interim guidance to help corporations determine whether they are subject to the new corporate alternative minimum tax and how to calculate the tax, including how to determine financial statement income and applicable financial statement income.

Massachusetts state tax implications for sales of PTE interests

When the sale of an interest in a PTE is contemplated, planning for state sourcing and taxability of the gain should both be considered so the owners avoid a large — and sometimes unexpected — state income tax liability.
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