TEFRA

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.

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 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.

Penalties against LLC approved by IRS supervisor, Tax Court holds

In Salacoa Stone Quarry, LLC, the Tax Court held that penalties for misstatement of a charitable conservation easement’s value were properly approved by an IRS supervisor, despite a discrepancy in dates on the penalty approval documents.

Beneficial ownership information reporting: Right around the corner

Clients should start developing procedures and policies to comply with the new reporting requirement and begin to gather the data that will be necessary.

Ninth Circuit again addresses return filing

Faxing a return copy to an IRS agent or mailing it to an IRS attorney is not ‘filing’ the return.

PTE deduction: Timing issues for accrual-method taxpayers

taxpayers and practitioners face uncertainty regarding the timing of the deduction provided for in Notice 2020-75.

Notice listing syndicated conservation easement transactions held invalid

Notice identifying syndicated conservation easement transactions as listed transactions is held invalid.

FinCEN provides time estimates for compiling beneficial ownership details

FinCEN estimates that most companies will have a simple structure that will require 90 minutes per response, but complex entry filings will require much more time.

FinCEN proposes rules about access to beneficial ownership information

Proposed regulations under the Corporate Transparency Act address protocols for access to beneficial owner information by authorized recipients.

Domestic filing exception requirements modified in draft Scheds. K-2, K-3

Revised draft instructions for partnership and S corporation Schedules K-2 and K-3 contain significant changes to the requirements to qualify for the domestic filing exception for filing and furnishing the 2022 schedules.

Partnership examinations: Imputed underpayment modification

This item discusses how to request modification of an imputed underpayment.

Meaning of ‘filed’ defined for purposes of delinquent partnership returns

Delinquent partnership returns are ‘filed’ when they are delivered by the requested method to and received by an IRS official authorized to receive such returns;

Depreciation recapture in the partnership context

This item discusses how depreciation recapture applies in certain situations involving partnerships.

Tennessee taxation of passthrough entities

An insufficient understanding of the rules can be dangerous to taxpayers when determining which entity has a filing responsibility in Tennessee.

State tax considerations around the sale of a partnership interest

This item discusses how owners selling partnership interests should address which states may attempt to tax the entire gain, how taxation of the gain may be divided among the states where the partnership does business, compliance considerations, and technical developments and trends that may affect the transaction.

More Schedule K-2 and K-3 FAQs posted

In eight new FAQs on its website, the IRS covers some special issues, including several that it says will be added to the forms’ instructions.

BBA partnership audits show high no-change rate, TIGTA says

The Treasury Inspector General for Tax Administration recommends setting goals and benchmarks for the centralized audit regime under the Bipartisan Budget Act.

AICPA again asks IRS to delay K-2/K-3 reporting

Comment letters from the AICPA and state CPA societies also offer further recommendations.

IRS offers further K-2/K-3 relief

The new schedules for returns of passthrough entities with international items have been greeted with antipathy by practitioners. The IRS provided relief Wednesday for eligible entities for tax year 2021.
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