TEFRA

LLC cannot raise due process claim for its members

The limited liability company lacked standing to bring the Fifth Amendment claim on its individual members’ behalf, the Tax Court held.

Fifth Circuit rejects ‘passive-investor’ definition of limited partner

The Fifth Circuit, overruling the Tax Court, held that for purposes of the Sec. 1402(a)(13) exclusion from self-employment tax, “limited partner” means a partner in a limited partnership that has limited liability.

Hedge funds: Tax structuring, planning, and compliance

Hedge funds may face tax issues of entity structuring, carried interest, management fee waivers, and trading-related rules. This article highlights planning strategies and compliance considerations as the IRS continues to increase its scrutiny of these investment vehicles.

PTEs need more notice of changes, more time to respond, AICPA says

In a letter to Treasury and the IRS, the AICPA seeks changes to tax reporting requirements for partnerships and S corporations.

Tax Court applies limited partner functional test for self-employment income

In Soroban Capital Partners, the Tax Court analyzed the roles, responsibilities, and capital contributions of three limited partners in a limited partnership and determined that they were limited partners in name only.

Final partnership adjustment not issued timely

The Tax Court found a regulation invalid to the extent it holds the period open for the IRS to issue a final partnership adjustment longer than the statutory 270 days after a partnership has submitted “everything required” for a complete modification request.

Signing partnerships’ returns and other tax documents

A recent Chief Counsel Advice memo underscores the importance of having the right person sign a partnership’s returns and other tax documents filed with the IRS.

Sec. 987 final regulations: A practical approach for partnerships

Recent final regulations offer guidance as to what Treasury and the IRS may consider an eligible method for partnerships and Sec. 987 QBUs held by partnerships to determine Sec. 987 gain or loss.

New IRS form for partners receiving property distributions

Form 7217, Partner’s Report of Property Distributed by a Partnership, debuted for 2024, intended to apprise the IRS of factors in a partner’s basis computation.

Strategies for information return penalties and Form 945 assessments

Penalties for failure to file correct information returns and backup withholding can be waived, but timely and correct responses to IRS notices are essential.

Expenses that could have been substantiated not allowed

The Cohan rule for estimating business deductions did not apply where taxpayers could have substantiated them but failed to do so, the Tax Court held.

Using the IRS’s BBA Online Form Submission Service

To request a modification to an imputed underpayment from a Bipartisan Budget Act audit or push out the underlying adjustment, audited partnerships must use the IRS’s web-based service.

IRS grants partnerships additional time to furnish complete Forms 8308

The IRS is providing relief from penalties imposed solely for failure to furnish Part IV of Form 8308 for partnerships by Jan. 31, 2025, if a partnership meets certain requirements.

Regs. address partnership recourse liabilities, related-party rules

The IRS issued regulations that finalize proposed regulations issued in 2013. The guidance is focused on when and to what extent a partner is treated as bearing the economic risk of loss and the special rules applying to a partner related to another partner.

LLC validly elected into BBA partnership examination regime

To make a valid election into the Bipartisan Budget Act’s audit procedures, the IRS could not require the taxpayer to establish, as opposed to represent, that it had sufficient assets to pay any imputed underpayment, the Tax Court held.

State considerations for BBA exams and adjustments

States vary in their treatment of partnership adjustments made under the centralized partnership audit regime instituted by the Bipartisan Budget Act of 2015.

The past, present, and future of the BBA partnership audit regime

The Bipartisan Budget Act streamlined the partnership audit and adjustment processes, but uncertainties remain.

Sec. 6603 deposits under the BBA audit regime

While the deposits can limit interest due on imputed underpayments under the centralized audit regime of the Bipartisan Budget Act of 2015, ambiguities remain, including for push-out elections.

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.

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.
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