Partnership and LLC Taxation

Guidance issued for LLCs seeking tax-exempt recognition

The IRS clarified the standards that an LLC must satisfy to obtain a determination letter that it is exempt from taxation under Sec. 501(c)(3).

Unvested partnership interests as compensation

This item focuses on the use of unvested capital interests as compensation.

Navigating the new Schedules K-2 and K-3

Schedule K-2 will report the partnership/S corporation–level activity attached to a flowthrough return, while Schedule K-3 will be provided to each partner or shareholder and report its proportionate amount for each item.

Illinois PTE tax would provide SALT cap workaround

This item discusses Illinois Legislature’s S.B. 2531, which includes a PTE tax that allows a workaround to the federal $10,000 limitation for state and local tax deductions.

The potential for lost benefits of Up-Cs in a Sec. 280E environment

This item summarizes the traditional Up-C/TRA arrangement and addresses the impact of Sec. 280E on the Up-C/TRA structure.

The Sec. 1061 capital interest exception and its impact on hedge funds

A hedge fund manager may be required to maintain separate tracking of a single partnership interest into several buckets to avoid the negative tax consequences of the short-term capital gain treatment of assets held from one to three years under Sec. 1061 for certain partnerships on the economic return of their invested capital.

When does a partnership terminate under Sec. 708?

It can be difficult to determine whether a partnership that retains de minimis assets or performs administrative functions during its winding-up period terminates, particularly if such activities cross tax years.

Partnership continuity in restructuring transactions

The issue of whether a partnership continues or terminates for U.S. federal income tax purposes frequently arises in restructuring transactions.

Where individual, corporate, and passthrough entity taxation meet

Passthrough owners must consider many risks and uncertainties, in addition to political trends on Capitol Hill, before opting into a state-level regime designed to bypass the $10,000 SALT deduction cap created by the TCJA.

Using a family LLC for estate planning

LLCs can help families achieve key business and tax objectives, while also providing liability protection and concentrating management power in the hands of less than all of the owners.

Final rules for interest expense deductions affecting hedge funds

The final regulations provide relief to hedge funds and their passive investors, although the regulations may increase the administrative burden and reporting requirements on hedge fund managers.

The partner-to-partner attribution trap and the anti-churning rules

Taxpayers dealing with tax basis step-up transactions involving related parties or rollover equity interests should consider the application of the anti-churning rules to avoid unforeseen results.

Sec. 1446(f) regulations: The rules and unanswered questions

This article addresses certain aspects of the withholding rules of the final Sec. 1446(f) regulations, options to eliminate or reduce Sec. 1446(f) withholding, and some outstanding issues.

Debt workouts involving commercial real estate

As short-term agreements that borrowers and creditors reached at the beginning of the pandemic start to expire, real estate companies and others will need to find long-term solutions to their insolvency problem.

Current developments in partners and partnerships

This article reviews and analyzes recent law changes as well as rulings and decisions involving partnerships.

Partnership interests, Sec. 465 at-risk limit, and Form 6198

This article focuses on the Sec. 465 at-risk limitation, one of the rules that could disallow all or part of a partner’s deduction of an allocable loss from a partnership.

IRS issues final rules on the treatment of carried interests

The IRS finalized proposed regulations on certain carried interests to account for changes made by the TCJA.

When does the centralized partnership audit regime not apply to partnership-related items?

Proposed regulations provide that the IRS may determine that the centralized partnership audit regime does not apply to adjustments to partnership-related items under certain conditions.

Top-of-market valuation for conservation easement upheld

A donated conservation easement has top-of-market value.

IRS releases new draft form to request revocation of Sec. 754 election

The form has been developed due to an increase in Sec. 754 election revocation applications since the technical termination of a partnership under former Sec. 708(b)(1) (B) was repealed under the TCJA.
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