Partnership and LLC Taxation

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election revocation applications since the technical termination of a partnership under former Sec. 708(b)(1) (B) was repealed under the TCJA.

Ensuring that allocations of LLC tax items are respected

If LLC members’ tax allocations are not made in accordance with the members’ interests in the LLC, they must fit into the substantial-economic-effect safe harbor.

IRS memorandum illustrates application of Sec. 704(c) anti-abuse rule

In FAA 20204201F, the IRS concluded that the Sec. 704(c) allocation method adopted by a partnership between a U.S. corporation and its domestic and foreign affiliates was unreasonable under the Sec. 704(c) anti-abuse rule.

Partner capital account reporting gets transition penalty relief

Errors by partnerships in reporting partners’ tax capital accounts under new rules for 2020 may be excused, the IRS outlined.

Carried interests regulations are finalized

The IRS finalized proposed regulations on certain carried interests to account for changes made by the Tax Cuts and Jobs Act (TCJA). The TCJA extended from one year to three years the holding period for making carried interests eligible for capital gain treatment.

Proposed regs. on carried interests

This item discusses proposed regulations regarding the tax treatment of carried interests.

Draft instructions for reporting partnership capital accounts are issued

The IRS released draft instructions for Form 1065 to calculate partner capital accounts using the tax-basis method.

Rules issued on transfers of partnership interests and effectively connected income

The IRS finalized proposed regulations on withholding from transfers of partnership interests to foreign persons and the definition of effectively connected income for those purposes.

Centralized partnership audit regime changes proposed

The IRS issued rules on two special enforcement matters for purposes of the unified partnership audit rules.

Partnerships and S corps. can deduct state and local taxes

The IRS said it would issue proposed regulations allowing S corporations and partnerships to deduct “specified income tax payments” paid to state and local governments above the line and not as passthrough items for partners and shareholders.

Settlement offers for pending litigation of syndicated conservation easements

The IRS announced time-limited settlement offers, requiring tax benefit concessions and assessing penalties, to eligible taxpayers with pending cases.

IRS proposes rules on carried interests

The IRS issued proposed regulations under Sec. 1061, enacted by the TCJA, which requires owners of certain partnership interests to hold them for three years to be eligible for capital gain treatment.

Draft instructions for partnership capital account reporting released

The IRS released draft instructions for Form 1065, U.S. Return of Partnership Income, to calculate partner capital accounts using the tax-basis method.

Rules govern withholding on transfers of partnership interests and ECI

The IRS finalized proposed regulations on withholding from transfers of partnership interests to foreign persons and the definition of effectively connected income for those purposes.
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