New rules regarding deductibility of partnership interest transfers

Article Abstract:

The IRS issued regulations in 1995 covering tax consequences and deductibility when limited partnership interests are transferred in exchange for performance of services. These regs provide taxpayers with more flexibility by eliminating the strict requirement for withholding income tax as a condition precedent for deductibility of payments in kind. The regs instead allow the deduction by deeming inclusion of the amount in the gross income of the service provider. However, special attention should be given to interest transfers subject to risk of forfeiture, since improper reporting can result in loss of the deduction.

Tax deductions, Limited partnership, Limited partnerships

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Proposed regulations simplify tax treatment of surprise partnership terminations

Article Abstract:

The IRS's proposed regulations governing IRC Sections 708(b)(1)(B), 704(c)(1), 737, and 743 will clarify issues surrounding inadvertent partnership terminations. These terminations can occur following exchanges of interests or sales, and can trigger undesirable tax recognition of distributions deemed to have been made. The proposed regulations end the deemed distribution approach and substitute rules on built-in gain, distributions, and basis adjustment that clearly favor taxpayers.

Partnership distributions

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Proposed regulations regarding basis adjustments following transfer of a partnership interest

Article Abstract:

The IRS has issued proposed regulations under IRC section 743 which contain new partnership basis rules changing the taxation resulting from transfers of partnership interests. The major differences in the new allocation rules can be seen by reference to two examples. Reporting and documentation changes are included which place new requirements on the transferor partnership.

Basis (Taxation)

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