Partnership and LLC Taxation

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.

Who Is a Limited Partner? The IRS Issues Sec. 469 Prop. Regs.

Despite its importance in assessing an individual’s tax liability, the determination of whether a person is a “limited partner” for federal income tax purposes is often uncertain.

Multistate Partnerships: To Withhold, or Not to Withhold?

The varying rules for withholding can create a compliance nightmare for multistate partnerships with a large number of partners.

The Research Credit and Deduction for Passthrough Entities

Passthrough entities may be overlooking the research tax credit because they are not aware that they are engaged in eligible activities, do not think their activities are qualified, or do not believe they can meet the various requirements.

Final Partnership Debt-for-Equity Regulations

The IRS issued final regulations that provide guidance on the recognition of discharge of indebtedness income in partnership debt-for-equity transfers.

Reporting Dilemma: Personal Use of Rental Properties

Properly apportioning real estate expenses between personal and rental use presents several challenges.

Electronic Schedules K-1

The IRS issued rules partnerships must follow if they want to supply Schedules K-1 electronically.

Application of the Tax Basis and At-Risk Loss Limitations to Partners

Individual partners who have been allocated a distributive share of loss must satisfy three separate loss limitations before the loss can be used.

Family Investment Partnerships: All the Perks

Family investment partnerships are frequently used to manage and control multigenerational family wealth and may result in significant economic and tax benefits.

Banks Are Lenders to Partnership, Not Partners

The Second Circuit held that two banks were lenders to a partnership, not partners in the partnership under Sec. 704(e)(1).

Partnerships Can Issue Schedules K-1 Electronically

The IRS issued rules partnerships must follow if they want to supply Schedules K-1 electronically.

Current Developments in Partners and Partnerships

This article reviews and analyzes recent rulings and decisions involving partnerships.

Invalid Sec. 754 Elections: Some Observations

This item discusses the requirements for a valid Sec. 754 election and then highlights some of the reasons for those late or missed elections.

IRS Issues Regs. on Interest Expense Allocation and Apportionment for Partners

The IRS has issued temporary and proposed regulations that make four changes to the rules for allocating and apportioning interest expense for partners in partnerships.

Regs. Issued on Transfers of Partnership Interest to Satisfy Partnership Debt

The IRS issued final regulations on the application of Sec. 108(e)(8) to partners and partnerships.
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