The IRS finalized the 10-year-old proposed regulations on the treatment of non-compensatory partnership options. The IRS also published some clean-up changes in Announcement 2013-28. In general the final regulations follow the taxpayer-favorable approach of the proposed regulations to treat the exercise of a non-compensatory option as tax-free to the partnership and the partners under section 721. … Continue Reading
Category Archives: Joint Venture
Subscribe to Joint Venture RSS FeedIRS Removes De Minimis Exception For Testing Partnership Allocations
Posted in Deductions, Joint Venture, Partnership/LLC, Real EstateIn 2008, the IRS published regulations on how to apply the section 704(b) substantiality tests when one or more partners is a “look-through” entity. In general the 2008 regulations required looking through these partners to the ultimate owner to determine if there was an overall net tax savings from partnership special allocations. The 2008 final regulations had included a… Continue Reading
Final Regulations Address Partnership Debt-For-Equity Transactions
Posted in General, Joint Venture, Partnership/LLC, WorkoutsToday the IRS issued final regulations under section 108(e)(8) to clarify the mechanics of loan workouts when a lender contributes its loan in exchange for equity in the borrower-partnership. In 2004, Congress extended this historical corporate rule to partnerships, providing that the partnership is required to recognize cancelation of debt (COD) income to the extent… Continue Reading
IRS Proposes Revocation of Partnership De Minimis Rule
Posted in Joint Venture, Partnership/LLCIn 2008, the IRS finalized regulations on how to apply the section 704(b) substantiality tests when one or more partners is a “look-through” entity. In general the regulations required looking through these partners to the ultimate owner to determine if there was an overall net tax savings from partnership special allocations that would be policed by the… Continue Reading
Tax Court Denies Partnership Status to 100% Related Joint Venture
Posted in Joint VentureThe Tax Court denied partnership tax status to a joint venture between a C corporation and pass-through partner that were 100% commonly controlled. The result was that the income allocations of the joint venture were ignored and income was reallocated between the owners. In practice the corporate partner was the face of the business but… Continue Reading
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