Partnership and LLC Taxation

Final partnership adjustment not issued timely

The Tax Court found a regulation invalid to the extent it holds the period open for the IRS to issue a final partnership adjustment longer than the statutory 270 days after a partnership has submitted “everything required” for a complete modification request.

Changing an existing LLC’s federal income tax classification

LLCs changing from partnership tax treatment to corporation or vice-versa may encounter issues including gain recognition.

Partnership recapitalization: Lender admittance without liability reduction

The consequences under Subchapter K and Sec. 1001 must be considered in a debt modification in which a lender takes an equity position in a debtor partnership and there is no reduction in principal.

Outlier or beginning of a trend? Illinois redefines investment partnerships

With its 2023 gain-nonrecognition law, the state is welcoming more nonresident investors.

Signing partnerships’ returns and other tax documents

A recent Chief Counsel Advice memo underscores the importance of having the right person sign a partnership’s returns and other tax documents filed with the IRS.

Prop. regs. would modify reporting obligations for Form 8308, Part IV

The IRS issued proposed regulations that would modify partnerships’ reporting obligations for Part IV of Form 8308 with respect to sales or exchanges of certain interests in partnerships owning inventory or unrealized receivables.

IRS includes several AICPA recommendations in corporate AMT interim guidance

In a notice issued Tuesday, the IRS said it intends to partially withdraw proposed regulations and issue revised proposed regulations.

Potential recapture pitfall for profits-interest partners

Allocations under Regs. Sec. 1.1245-1(e)(2)(i) may result in profits-interest partners being allocated ordinary income even though they were not previously allocated any depreciation or amortization deductions.

Distributions of Sec. 704(c) property by an LLC

A member that contributes Sec. 704(c) property (property with a basis different than fair market value (FMV) when contributed) to a limited liability company (LLC) classified as a partnership may be required to recognize gain or loss if that property is later distributed to another member. Under Sec. 704(c)(1)(B), a distribution of

Powers of attorney for partnerships

Rules for signing the power-of-attorney form vary widely between partnerships audited under the Bipartisan Budget Act of 2015 (BBA) versus those under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA).

AICPA proposes changes to Senate bill that would help most US businesses

Passthrough entities would lose ground compared with corporations under tax language in the Senate Finance Committee bill, the AICPA said in a letter to legislative finance leaders.

AICPA makes Priority Guidance Plan recommendations to IRS

In addition to its 183 recommendations for the IRS plan, the AICPA encouraged the agency to continue to pursue tax simplification.

Partnership reporting of contributions to foreign entities

Substantial penalties may be imposed if a taxpayer fails to report contributions to foreign entities.

Why non-US directors can rarely exempt US-source compensation from US income tax

At $3,000 and never adjusted for inflation during nearly a century, the Sec. 861(a)(3) de minimis exception seldom applies.

Sec. 541: A trap for the unwary investment partnership

The 20% personal holding company tax may unexpectedly apply to an investment partnership.

Sec. 987 final regulations: A practical approach for partnerships

Recent final regulations offer guidance as to what Treasury and the IRS may consider an eligible method for partnerships and Sec. 987 QBUs held by partnerships to determine Sec. 987 gain or loss.

Reconciliation bill clears committee on second try

Sunday revote came after Republican fiscal hawks initially joined Democrats to sink the bill, which includes tax provisions approved by the House Ways and Means Committee last week.

Ways and Means approves proposed TCJA extensions and tax changes

The bill would make key portions of the TCJA permanent and create a new “senior bonus” deduction, among its many provisions. An AICPA statement said it is “deeply troubled” by the plan to curtail use of passthroughs to avoid SALT cap. The bill now heads to the House Budget Committee.

Building not a certified historic structure

The Tax Court denied deduction of a qualified conservation contribution of a façade easement, noting the building lacked a required listing in the National Register of Historic Places.

The complex simplicity of partnership interests exchanged for services

Preventing unwanted tax consequences from compensatory partnership interests requires understanding Regs. Sec. 1.721-1(b)(2) and safe-harbor guidance under Rev. Procs. 93-27 and 2001-43.
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