Partnership and LLC Taxation

Basis for “Bad Boys”

Including “bad boy” provisions in loan agreements is a common practice to protect the lender in the commercial real estate finance industry.

New Partnership Audit Procedures Will Have a Profound Impact

Changes in the the Bipartisan Budget Act of 2015 are a departure from how partnerships have been treated for federal income tax purposes.

Disguised-Sale and Partnership Liability Allocation Rules Issued

The IRS issued three sets of regulations addressing issues of disguised sales of property by or to a partnership and allocations of excess nonrecourse liabilities to partners.

Advantages of an Optional Partnership Basis Adjustment

The optional basis adjustment election is an attempt to allow partners to correct certain discrepancies by affecting a transferee’s allocable basis in the underlying partnership assets.

IRS Provides Rules for Early Election of New Partnership Audit Procedures

The IRS issued rules regarding the time, manner, and form for partnerships to make the election to apply the recently enacted unified partnership audit rules for certain years before Jan. 1, 2018.

A Glimpse Into the New Partnership Audit Rules

The changes affect not only procedural rules and technicalities, but also the underlying economic valuation of partnership interests and legal rights of partners as well.

Violating Certain “Bad Boy” Guarantees Can Trigger Recourse Liabilities

This item examines whether a bad-boy guarantee changes an otherwise nonrecourse liability to a recourse liability.

How the COD Rules Apply to Grantor Trusts and Disregarded Entities

New regulations provide rules for determining who is the “taxpayer” for purposes of applying the Sec. 108 discharge-of-indebtedness rules to a grantor trust or disregarded entity.

IRS Issues Temporary Regulations on Early Elections of New Partnership Audit Procedures

The IRS issued rules regarding the time, manner, and form for partnerships to make the election to apply the recently enacted unified partnership audit rules for certain years before Jan. 1, 2018.

Recognizing When a Disguised Sale of Property Takes Place

Property transfers between a partner and a partnership are considered to be a taxable sale of the property under certain circumstances.

Partnership Audit Rules for the Next Decade

This article analyzes new rules regarding the audit procedures for partnerships and describes important elections partnerships may make.

Time to Adjust: Adding to the List of Partnership Revaluation Events

The IRS should consider expanding the list of revaluation events to include additional transactions that change the underlying economics of the partners’ arrangement, if a reliable FMV for the revalued assets can be established.

Missing Partnership Merger Definition Raises Questions

Regulations governing the federal income tax consequences of a partnership merger lack clear guidance on when a transaction resulting in the combination of two partnerships into a single partnership constitutes a merger.

Temporary Regulations Prohibit Partners From Being Employees

The IRS issued temporary regulations intended to halt the practice of treating partners as employees of a disregarded entity in order to include them in employee benefit plans.

Final Regulations Clarify COD Rules for Grantor Trusts and Disregarded Entities

The IRS finalized regulations that provide rules for determining who is the “taxpayer” for purposes of applying the Sec. 108 discharge-of-indebtedness rules to a grantor trust or disregarded entity.

Liquidation of an LLC

Rules regarding gain or loss on liquidation are a major reason for formation as an LLC rather than as a corporation.

Regulations Clarify: Partners Cannot Be Employees

The IRS issued temporary regulations clarifying that partners in a partnership that owns a disregarded entity cannot be treated as employees of the disregarded entity.

Rules for Partnership Allocations of Creditable Foreign Taxes Are Amended

Temporary regulations issued by the IRS amend an existing safe harbor that is used for determining whether allocations of CFTEs are deemed to be in accordance with the partners’ interests in the partnership.

Using the “Zero-Value” Approach for Carried Interests

There are risks are associated with valuing carried interest transfers.

Gifts of Partnership Interests

If the general partner has unfettered discretion to make or withhold distributions, any gift of an interest in the partnership may be treated as a gift of a future interest not qualifying for the annual gift tax exclusion.
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