Recent illustrations of the IRS's search for economic reality in partnership undertakings

Article Abstract:

IRS Letter Ruling 9622014 and the Ninth Circuit's 1996 affirmation of the Monahan decision indicate the degree to which the IRS is willing to go to scrutinize the economic relationships underlying partnership arrangements. The letter ruling underscores the IRS's determination to assess partnership debt liability so as to properly allocate debt basis and the handling of constructive cash distributions. In the Monahan case, the IRS won its argument that a partner's handling of a negative capital account was improper.

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Incentive techniques for partnership employees

Article Abstract:

The IRS in Letter Ruling 9822012 provides guidance to businesses structuring employee compensation incentive plans which should result in beneficial taxation while fulfilling business purposes. Parent corporate partners may benefit by providing financial incentives to joint venture or partnership employees. The IRS ruling discusses the use of nonqualified stock options and tax treatment under IRC sections 83 and 1032. The use and tax treatment of stock appreciation rights are also addressed in the ruling.

Employee Benefits & Services, Human resource management, Employee benefits, Employee stock options

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Unrelated business taxable income, can a guaranteed payment to a tax-exempt partner solve this problem?

Article Abstract:

Nonprofit entities, such as qualified retirement plans, may consider investments in real estate through the use of the partnership structure to help to avoid incurring taxable unrelated business or unrelated debt financed income. Improper planning can result in taxation due to the operation of IRC sections 414 and 512. Partnership section 707(c) and related IRS rulings may provide planning guidance.

Religious, Grantmaking, Civic, Professional, and Similar Organizations, Nonprofit Institutions, Investments, Pension funds, Nonprofit organizations, Unrelated business income tax

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