Partnership and LLC Taxation

The Tax Adviser 2014 Best Article Award

James M. Greenwell received the award for his article on Sec. 704(c) Allocations.

Regulations Determine Partnership Distributive Shares When Ownership Changes

The IRS issued final regulations on determining partners’ distributive shares of partnership items when a partner’s interest varies during the partnership’s tax year.

Return Due Dates Changed in Highway Funding Bill

The short-term highway funding extension passed by the Senate contains several important tax provisions.

Attacking Transactions to Evade General Utilities Repeal

Temporary regulations prevent corporations from avoiding tax through the use of partnerships.

Proposed Rules Define Disguised Payments for Services in Partnerships

The IRS will apply a six-factor test to determine whether payments to partners are disguised payments for services under proposed regulations.

Reporting Information Regarding LLCs’ Passive Activities

Determining whether each individual member of an LLC materially participates requires assumptions that can pose problems.

Making a Valid Sec. 754 Election Following a Transfer of a Partnership Interest

It is not uncommon for a partnership to attempt to make a valid Sec. 754 election, only to find that it failed to satisfy regulatory requirements.

The Exclusion for Meals and Lodging

This article explains the general exclusion under Sec. 119(a) and the other limited exclusions for meals and lodging received from an employer and addresses whether a partnership may treat a partner as an employee for purposes of the Sec. 119(a) exclusion.

Selling Partnerships That Own CFCs: A Potential Trap for the Unwary

Should gain recognized on a sale of a partnership that owns CFC stock be treated as capital gain or ordinary income?

Incorporating a Partnership and Selling to an ESOP in a Tax-Free Transaction

This item explores the main issues a partnership should consider from a restructuring perspective when considering ESOP ownership transactions.

Identifying What Constitutes Partnership Liabilities and How They Affect the Basis of Partnership Assets

Only partnership debt that has an impact on the partnership’s inside basis is a liability. All other debt is excluded from consideration.

The Importance of Being Flexible: Choice-of-Entity Considerations

This item presents an overview of some of the tax points that should be kept in mind when choosing an entity. 

Proposed Regulations Would Require Gain or Loss Recognition on Certain Installment Obligation Transfers

The IRS issued proposed regulations that would require transferors that transfer installment obligations for equity interests in corporations or partnerships in nonrecognition transactions in satisfaction of those obligations to recognize gain or loss.

Current Developments in Partners and Partnerships

This article reviews and analyzes recent regulations, rulings, and cases involving partnerships, including developments in partnership formation and operations, ­income allocations, and basis adjustments.

Proposed Regulations Would Change Treatment of Sec. 751 Property

The IRS issued proposed regulations under Sec. 751 that would amend the rules governing how a partner measures its interest in a partnership’s unrealized receivables and inventory items and the tax consequences of a distribution to a partner reducing that interest.

Procedures for Withholding Foreign Partnerships and Withholding Foreign Trusts Coordinated With FATCA

The IRS issued updated procedures in Rev. Proc. 2014-47 for "withholding foreign partnerships" and "withholding foreign trusts" that elect to assume certain U.S. withholding tax responsibilities.

Active Members of an Investment Adviser LLC Are Subject to Self-Employment Tax

The IRS Office of Chief Counsel determined that actively working members of an investment management company formed as a limited liability company were not limited partners within the meaning of Sec. 1402(a)(13), and, thus, their net distributive shares of management fee income were subject to self-employment tax.

Transfers of Installment Obligations Would Trigger Gain or Loss Under Proposed Rules

The IRS issued proposed regulations relating to the nonrecognition of gain or loss on certain dispositions of an installment obligation.

Valuing Partnership Interests Acquired in Exchange for Services

This column addresses the rules that currently govern the receipt of a partnership interest in exchange for services. Practitioners should be aware that proposed regulations and Notice 2005-43 provide new rules and new safe-harbor provisions that will apply to the receipt of a partnership interest by a service partner when the regulations are finalized.

Proposed Rules Would Change Partners’ Treatment of Unrealized Receivables and Inventory Items

The IRS issued proposed regulations under Sec. 751 that would amend the rules governing how a partner measures its interest in a partnership’s unrealized receivables and inventory items and the tax consequences of a distribution to a partner reducing that interest.
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