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Partnership

Interests in partnership investing in student loans treated as obligations in registered form

Interests in partnership investing in student loans treated as obligations in registered form

PLR 201614026 In a private letter ruling (PLR), IRS has concluded that interests in a partnership organized to invest in student loans using funds from domestic feeder and foreign feeder partnerships will be treated as being obligations in registered form for purposes of Code Sec. 163(f)(1). Background. Under Code Sec. 163(f)(1), there’s no deduction for interest […]

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Taxpayer must report share of partnership income even though he was unaware there was income

Taxpayer must report share of partnership income even though he was unaware there was income

Lamas-Richie, TC Memo 2016-63TC Memo 2016-63 The Tax Court has concluded that a gossip blogger was liable for tax on his distributive share of partnership income that was not actually distributed to him and of which he was not aware until IRS began examining his return for the year at issue. However, the Court declined […]

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“Bad boy” carve-outs don’t automatically end treatment as nonrecourse liability

“Bad boy” carve-outs don’t automatically end treatment as nonrecourse liability

Legal Advice Issued by Associate Chief Counsel 2016-001 Legal Advice Issued by Associate Chief Counsel, “Nonrecourse Carve-Out” Guarantee of a Partnership Liability. In Legal Advice Issued by Associate Chief Counsel, IRS — reversing its previous position — has concluded that if a partner’s guarantee of a partnership’s nonrecourse obligation is conditioned on the occurrence of […]

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Field Advice – No partnership existed for tax purposes because there was no risk of loss or chance of gain

Field Advice – No partnership existed for tax purposes because there was no risk of loss or chance of gain

Legal Advice Issued by Field Attorneys 20161101F In a highly redacted Legal Advice Issued by Field Attorneys (LAFA), IRS has concluded that a taxpayer’s investment in an arrangement which was to provide it with Code Sec. 45 refined coal production tax credits wasn’t a bona fide partnership. The purported partner did not engage in a […]

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Blue Book on 2015 Legislation Explains “Election Out” of Revised Partnership Audit Rules

Blue Book on 2015 Legislation Explains “Election Out” of Revised Partnership Audit Rules

General Explanation of “Tax Legislation Enacted in 2015,” prepared by the staff of the Joint Committee on Taxation (JCS-1-16, March 2016). The staff of the Joint Committee on Taxation (JCT) has published a “General Explanation of Tax Legislation Enacted in 2015,” also known as the “Blue Book.” It contains helpful explanations on 13 different laws […]

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Partnership’s obligations under a construction contract were liabilities under Code Sec. 752

Partnership’s obligations under a construction contract were liabilities under Code Sec. 752

PLR 201608005 IRS has privately ruled that a partnership’s obligations under a construction contract, to proceed with performing work and to incur related costs, as well as to provide remedies in the event of a default, were liabilities under Code Sec. 752 as of the date of, and to the extent of, certain payments that […]

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Comments sought on issues relating to implementation of new partnership audit rules

Comments sought on issues relating to implementation of new partnership audit rules

Notice 2016-23, 2016-12 IRB In a Notice, IRS is seeking comments on the new partnership audit regime, enacted as part of the Bipartisan Budget Act of 2015 (P.L. 114-74, the BBA). The new audit regime is generally effective for tax years beginning after 2017, but parts of it can apply at the partnership’s election to […]

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Publicly traded partnership’s income from fluid management services was qualifying income

Publicly traded partnership’s income from fluid management services was qualifying income

PLR 201608011 IRS has privately ruled that the gross income of a publicly traded partnership (PTP) from its fluid management and disposal services, and from selling to non-end/retail users filtered hydrocarbons collected as part of the disposal process, was qualifying income under Code Sec. 7704(d)(1)(E). However, the ruling didn’t apply to income derived by the […]

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District Court – taxpayer that reimbursed contributor to charity could take charitable deduction

District Court – taxpayer that reimbursed contributor to charity could take charitable deduction

Green, (DC OK 2/10/2016) 117 AFTR 2d ¶ 2016-418 A district court has held that, where a partnership intended to make a charitable contribution, but, instead the contribution was made by a related corporation, and then the partnership reimbursed the corporation, the partnership was entitled to the charitable deduction. Background. Under Code Sec. 170(a), a taxpayer […]

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Tax consequences of member’s guarantee of LLC’s qualified non-recourse financing

Tax consequences of member’s guarantee of LLC’s qualified non-recourse financing

Chief Counsel Advice 201606027 In Chief Counsel Advice (CCA), IRS has determined the tax effect, for purposes of the basis and at-risk limitations applicable to a member’s loss deductions attributable to an LLC taxed as a partnership, of another member’s guarantee of the LLC’s qualified non-recourse financing debt. The CCA generally held that the guarantee […]

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Temp regs issued on partnership’s allocation of creditable foreign tax expenditures

Temp regs issued on partnership’s allocation of creditable foreign tax expenditures

T.D. 9748, 02/03/2016, Reg. § 1.704-1T; Preamble to Prop Reg02/03/2016, Prop Reg § 1.704-1 IRS has issued temporary regs on the operation of the safe harbor rule under Reg. § 1.704-1(b)(4)(viii), which is used in determining whether allocations of partnership creditable foreign tax expenditures to partners are deemed to be in accordance with the partners’ […]

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Partnership fails in attempt to get Tax Court to halt IRS proceeding against partner

Partnership fails in attempt to get Tax Court to halt IRS proceeding against partner

Endeavor Partners Fund, LLC, TC Memo 2016-12 The Tax Court has rejected a partnership’s motion to enjoin IRS from taking any further action in its separate administrative proceeding against an indirect partner of the partnership until the Court ruled on the partnership’s Tax Court petition. It also rejected the partnership’s motion that the Court certify […]

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Court of Appeals 9th Circuit – IRS breach of partnership closing agreement didn’t invalidate partner tax assessment

Court of Appeals 9th Circuit – IRS breach of partnership closing agreement didn’t invalidate partner tax assessment

Davis, (CA 9 1/25/2016) 117 AFTR 2d ¶ 2016-368 The Court of Appeals for the Ninth Circuit, reversing a district court decision, has upheld IRS’s assessment of taxes on a partner with respect to partnership items, even though IRS breached a clause in its closing agreement with the partnership. The Court also rejected the partner’s […]

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IRS sets out treatment of life insurance co.’s separate accounts invested in partnership funds

IRS sets out treatment of life insurance co.’s separate accounts invested in partnership funds

Chief Counsel Advice 201603023 In Chief Counsel Advice (CCA), IRS has explained how to treat a life insurance company’s “company’s share” of dividends received deductions (DRDs) for separate account assets invested in partnership funds under the Code Sec. 812 proration rule. IRS also addressed the treatment of the partnership fund investment fees. Background. In determining a […]

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Supreme Court won’t hear case finding foreign banks did not have capital interest in partnership

Supreme Court won’t hear case finding foreign banks did not have capital interest in partnership

TIFD III-E Inc. v. U.S., (CA 2 1/24/2012), 109 AFTR 2d 2012-632109 AFTR 2d 2012-632, cert denied 1/11/2016 The Supreme Court has declined to review the decision of the Court of Appeals for the Second Circuit, which, reversing the district court on remand for the second time, held that an interest overwhelmingly in the nature […]

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Court of Appeals affirms; partnership’s allocation of state credits to new partner was disguised sale

Court of Appeals affirms; partnership’s allocation of state credits to new partner was disguised sale

Route 231, LLC, (CA 4 1/8/2016) 117 AFTR 2d ¶ 2016-323 The Court of Appeals for the Fourth Circuit, affirming the Tax Court, has determined that the Code Sec. 707 disguised sale rules applied to a transaction involving a contribution of cash to a partnership by a party that the partnership alleged was a new […]

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Aircraft held for productive use in a trade or business and qualify for tax-free exchange

Aircraft held for productive use in a trade or business and qualify for tax-free exchange

Chief Counsel Advice 201601011 In Chief Counsel Advice (CCA), IRS has concluded that aircraft that a partnership initially held and aircraft that it received in exchange for the initial aircraft were held “for productive use in a trade or business” for purposes of qualifying for a tax-free exchange under Code Sec. 1031, where the aircraft—which […]

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S corporation partners in a partnership met the shareholder limit after restructuring

S corporation partners in a partnership met the shareholder limit after restructuring

PLR 201544020 In a Private Letter Ruling (PLR), IRS has ruled that two S corporations, each of which met the 100-shareholder limit under Code Sec. 1361(b)(1)(A), would continue to qualify as S corporations where they would own the entire interest in another S corporation (which had close to 100 shareholders) that became a partnership in […]

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November 4 — Public Law number assigned to budget agreement that eliminates TEFRA and large partnership audit rules

November 4 — Public Law number assigned to budget agreement that eliminates TEFRA and large partnership audit rules

A Public Law number has been assigned to H.R. 1314, the “Bipartisan Budget Agreement of 2015” — P.L. 114-74. The Act which was signed by the president into law on Nov. 3, 2015, lifts mandatory spending caps on defense and domestic programs, raises the federal debt ceiling, and includes important tax provisions. Effective generally for […]

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November 3 — President signs into law budget agreement that eliminates TEFRA and electing large partnership audit rules

November 3 — President signs into law budget agreement that eliminates TEFRA and electing large partnership audit rules

On November 2, President Obama signed into law H.R. 1314, the “Bipartisan Budget Agreement of 2015”, which lifts mandatory spending caps on defense and domestic programs, raises the federal debt ceiling, and includes important tax provisions. Effective generally for returns filed for partnership tax years beginning after Dec. 31, 2017, the new law eliminates the […]

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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Member CA Bar Member Orange County Bar US Tax Court Attorney