Partnership and LLC Taxation

Targeted Partnership Allocations: Part I

This article discusses the rules governing safe-harbor allocations, the rules governing targeted allocations, and reasons for the use of targeted allocations.

Schedule M-3 Filing Requirement Reduced for Entities Below $50 Million in Assets

The IRS announced changes in the filing requirements for Schedule M-3, Net Income (Loss) Reconciliation, for certain corporations and partnerships.

Foreign Corporations Investing in Partnerships: Common Branch Profits Tax Issues

Highlights of the tax compliance challenges that often arise as a result of U.S. branch profits tax exposure.

Sec. 901(m): Potential Trap for Partnership Transactions

New Sec. 901(m) limits the creditability of foreign taxes in certain acquisition transactions where a taxpayer receives a basis step-up for U.S. tax purposes but no corresponding basis step-up for foreign tax purposes.

Incorporating an Insolvent Partnership: Availability of the Insolvency Exclusion

Incurring COD income at the partnership level may provide significantly different, and potentially detrimental, tax results to owners in a partnership than would incurring COD income at the corporate level.

Check-the-Box: A Trap for the Unwary

It has never been easier to effect the choice of operating as a sole proprietorship, partnership, or corporation for federal income tax purposes; however, sometimes unforeseen problems can result.

Recently Issued Sec. 108(e)(8) Regulations: Liquidation Value Safe Harbor

Recently issued final regulations on partnership debt-for-equity exchanges contain a liquidation value safe-harbor method for valuing the partnership interest received in exchange for the cancellation of debt.

Partners’ Income Allocations and the New Net Investment Income Tax

The health care acts, along with recently issued Treasury guidance on the applicability of the additional Medicare tax, may prompt partnerships to reevaluate the potential tax impact of the partnership’s structure on their individual partners.

Long-Awaited Final Regs. Issued on Noncompensatory Partnership Options

The IRS issued regulations on the treatment of certain call options, warrants, convertible debt, and convertible equity that are not issued in connection with the performance of services, i.e., noncompensatory partnership options.

Payments to Taxpayer Held to Be Compensation, Not Distributions

The Eleventh Circuit held that payments made to a taxpayer by limited partnerships that he controlled but did not own an interest in were compensation reportable on Schedule C, not partnership distributions.

Current Developments in Partners and Partnerships

This article reviews and analyzes recent rulings and decisions involving partnerships. The discussion covers developments in partnership formation, income allocations, and basis adjustments.

Final Regs. Remove De Minimis Partner Rule

The IRS issued final regulations that remove the de minimis partner rule from Regs. Sec. 1.704-1(b)(2)(iii)(e).

Debt Discharge Under Sec. 108: Partnerships vs. S Corps.

As tax liability for COD income gives many taxpayers an unpleasant surprise in today’s economy, its tax treatment continues to be a focal point for tax professionals in tax planning and preparation.

Rehabilitation Credits Disallowed

The Third Circuit held that a corporate partner in a partnership was not entitled to claim historic rehabilitation credits passed through to it from the partnership because the corporation was not a bona fide partner in the partnership.

Organizational and Startup Costs for Single-Member LLCs

Despite the widespread use of single-member LLCs, some confusion still exists regarding the tax treatment of the initial expenditures to form and operate this type of entity.

Measuring Insolvency Under Sec. 108

While determining if a taxpayer is bankrupt is straightforward, determining whether a taxpayer is insolvent can be tricky.

Income from Partnership Is Self-Employment Income Where Taxpayer Chose Not to Be a Partner

The Eleventh Circuit held that payments a taxpayer received from a nursing home business were taxable self-employment income despite the taxpayer’s convoluted attempts to characterize them as partnership distributions.

The Partnership “Technical Termination” Trap

A sale or exchange of 50% or more of the total interest in a partnership’s capital and profits within a 12-month period causes the tax year of the partnership to close.

Timing a Loss Deduction

When a real estate venture is structured so that one partner provides the capital and the second provides operational experience, how are losses incurred by the capital partner treated?

PTPs Can Use Safe Harbor to Determine COD Income That Is “Qualifying Income”

The IRS issued a safe harbor for publicly traded partnerships (PTPs) that want to avoid corporate taxation by qualifying under Sec. 7704(c) as partnerships with 90% or more of their income from qualifying sources.
Next
Previous