Partnership and LLC Taxation

Final regs. issued on conservation easement deduction disallowance

The IRS on Monday issued final regulations providing guidance on the new rule that disallows charitable contribution deductions for certain conservation easement contributions by partnerships and other passthrough entities.

Supreme Court issues narrow opinion upholding Sec. 965 transition tax

The Supreme Court upheld the mandatory repatriation tax as a valid exercise of Congress’s taxing authority. The Court did not reach the question of whether income must be realized to be taxable.

IRS moves to end ‘shell game’ of basis-shifting transactions

The Service said it will release new proposed regulations and a revenue ruling to challenge the use of basis-shifting transactions used by complex partnerships in moves that could add over $50 billion to government coffers over 10 years.

Filing an administrative adjustment request under the BBA

Partnerships’ administrative adjustment requests filed under the Bipartisan Budget Act rules can affect partners in disparate ways, including where adjustments flow through a tiered structure.

Calculating an LLC member’s amount at risk

Understanding the amount and composition of an LLC member’s amount at risk is crucial to determining the Sec. 465 limitation on losses that may be claimed.

Making sense of nonrecourse deductions in partnership taxation

Allocations to a partner may follow the partnership agreement or, where they lack substantial economic effect, be in accordance with the partner’s interest in the partnership. Special considerations apply to the allocation of nonrecourse deductions, i.e., losses, deductions, or expenditures attributable to nonrecourse liabilities.

Limited partners and self-employment tax: A new test

The Tax Court recently held in Soroban Capital Partners that to determine whether a limited partner’s partnership distributive share is excluded from self-employment tax under Sec. 1402(a)(13), an analysis of the partner’s actual functions and roles is required. This article discusses what that analysis should entail and offers tax planning tips.

Complications in Sec. 743(b) substituted basis transactions

Rules for allocating resulting adjustments among partnership assets can be challenging, especially with respect to a transferee partner.

What accountants need to know about the BBA

Partnerships do well to consider available elections and the power that partnership representatives wield under the audit procedures of the Bipartisan Budget Act of 2015.

PTETs: Orchestrating ASC 740 compliance

Passthrough entity tax (PTET) elections give partners and shareholders a workaround to the $10,000 deductibility limit for state and local taxes for individuals, but entities must reckon with their financial accounting implications while adapting to a wide variety of state PTET regimes.

Sec. 1402(a)(13) and limited partnerships

The limited partner exception does not apply to a partner in a state-law limited partnership that is limited in name only, the Tax Court holds.

IRS rules that conversion of LLC not a debt modification

A recent letter ruling addresses whether a limited liability company’s change to a corporation results in a deemed exchange of new debt for old.

A look at revised Form 8308

The newly expanded form can help transferors of partnership interests meet reporting requirements involving Sec. 751(a) “hot assets” gain or loss, collectibles gain, and unrecaptured Sec. 1250 gain.

IRS scrutinizes use of the SECA limited partner exception

In a compliance campaign and litigation, the IRS challenges partners’ claims of the Sec. 11402(a)(13) exception from Self-Employed Contributions Act employment tax liability.

A $10.7 million compensation deduction miss

The recent Hoops decision by the Seventh Circuit, affirming the Tax Court, highlights potential problems for accrual-basis employers of claiming a deduction of nondeferred compensation following mergers and acquisitions.

Current developments in partners and partnerships

This annual update reviews court rulings and guidance on issues including debt and income allocations, distributions, and basis adjustments.

Converting a sole proprietorship to an LLC

The conversion affords the advantage of limited liability, often with minimal changes in federal tax treatment.

Digital asset question added to more forms for 2023 tax returns

IRS adds a question about digital assets to forms covering partnerships, corporations, S corporations, and estates and trusts.

Missed Sec. 83(b) elections: Partnership and LLC special issues

This discussion focuses on grants of profits interests in a partnership or LLC and the relevance of Sec. 83(b) elections.

Prop. regs. issued on conservation easement deduction disallowance

The IRS on Friday issued proposed regulations providing guidance on the new rule that disallows charitable contribution deductions for certain conservation easement contributions by partnerships and other passthrough entities.
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