Header graphic for print
Tax Law Roundup current law developments in U.S. taxation

Tag Archives: partnership

Temporary Regulations Address Allocation of Creditable Foreign Tax Expense

Posted in International, Partnership/LLC, Tax Credits

The IRS published temporary and proposed regulations on allocations of creditable foreign tax expenditures (CFTEs).  The regulations make various technical changes to the existing regulatory safe harbor for allocating CFTEs.  The regulations are effective on February 4, 2016. The existing regulations provide special rules for foreign tax expense allocations when those expenses are eligible for… Continue Reading

Congress Passes Partnership Audit Reform – Obama Expected to Sign

Posted in General, Legislative, Partnership/LLC, Passthrough Entity, Procedure

This morning the Senate passed H.R. 1314 (The Bipartisan Budget Act of 2015), which will completely change the way partnerships (and LLCs taxed as partnerships) are audited.  The House passed the legislation on Wednesday and it is reported that President Obama will sign the legislation as soon as it reaches his desk.  As discussed in… Continue Reading

Partnership Audit Reform Marches Forward

Posted in General, Litigation/Controversy, Partnership/LLC, Passthrough Entity, Tax reform

As part of the current Bipartisan Budget Act of 2015, sweeping changes to the partnership audit rules could be imminent.  The new rules would greatly simplify the IRS procedures for auditing partnerships and likely increase the audit rate of partnerships.  The new rules would replace the current “TEFRA” and “Electing Large Partnership” rules with a… Continue Reading

9th Circuit Disregards Purported Related-Party Partnership

Posted in General, Joint Venture, Litigation/Controversy, Partnership/LLC, Passthrough Entity

In DJB Holding Corp. the 9th Circuit concluded that a purported related-party partnership was not a bona fide partnership for tax purposes and taxable income was redirected to the taxable C corporation performing the underlying profitable services. The ultimate taxable services were performed by the C corporation but a partnership agreement between that C corporation… Continue Reading

New IRS Guidance Expands Application of Section 956 to Controlled Foreign Corporations that Own Partnerships

Posted in International, Lending

Yesterday the IRS published two sets of regulations addressing when a US owner of a Controlled Foreign Corporation (CFC) has a deemed repatriation through the use of a CFC-owned foreign partnership. The regulations are based on Section 956, which in essence deems a repatriation to the extent a CFC invests in “U.S. property” – which… Continue Reading

Final Regulations Address Partnership Debt-For-Equity Transactions

Posted in General, Joint Venture, Partnership/LLC, Workouts

Today 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/LLC

In 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