News Updates

We Stay Up-To-Date on Flow-Through Tax News and Precedents So You Don't Have To.

Below you will find recent rulings and updates affecting flow-through taxes and closely-held business structures. If you have any questons on these, or about any updates on other sites, please do not hesitate to reach out to us for further insights.

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IRS Extends Deadline for Form 8038 Issuance to Partners

12/17/2024
News

A partnership is required to attach a separate Form 8308 to its Form 1065, U.S. Return of Partnership Income, to report each sale or exchange of all, or a portion of, a partnership interest where there has been a “§751(a) exchange.”

Treasury finalizes §752 regulations after 11 years

12/10/2024
News

After 11 years, Treasury issued final regulations under §752 on November 29, 2024. (See TD 10014.) The final regulations follow the proposed regulations, with clarifications. Among other elucidations, the final regulations clarify the circumstances and degree to which a partner is treated as assuming the economic risk of loss for a partnership liability, especially in instances involving multiple partners sharing this risk.

New §83(b) Election Form

11/18/2024
News

First, we at TAX FORUMS wish you a happy and healthy Thanksgiving and holiday season.

“Surk’s” up basis

11/13/2024
News

On October 29, 2024, the Tax Court issued its opinion in the case of Surk LLC v. Commissioner, T.C. Memo 2024-99, a case involving the impact on basis of a partnership interest when an LLC member improperly deducted losses for which the taxpayer had no basis. The taxpayer improperly deducted pass-through losses from an LLC in 2014 and 2015, violating the basis limitation rules of §704(d), which limits a partner’s ability to deduct losses only to the extent the partner has basis in the partnership interest at the end of the tax year in which the loss occurred. The IRS did not challenge these “excess losses,” deducted in tax years that were closed by the statute of limitations, nor did the IRS dispute the amount of the excess losses at trial. Rather, the IRS asserted that the taxpayer must decrease the basis in its LLC interest for 2017, the year under examination and before the Tax Court, to “account for the excess loss.”

New Developments in the §1402(a)(13) Limited Partner SE Tax Exclusion Arena

08/19/2024
News

Last Monday, the taxpayer filed its briefs to the Fifth Circuit in Sirius Solutions v. Commissioner, No. 24-60240, which, as discussed in a prior email blast, essentially is an appeal of the Tax Court’s holding in Soroban Capital Partners LP v. Commissioner, 161 TC No. 12 (Nov. 28, 2023). These two cases, together with Denham Capital Management LP v. Commissioner, No. 9973-23, and Point72 Asset Management LP v. Commissioner, No. 12752-23, all deal with the applicability of the §1402(a)(13) limited partner exclusion from SE tax in the situation where the limited partner is providing services on a full-time basis either directly or indirectly to an operating partnership.

Disproportionate Distributions Won’t Automatically Terminate S Status

08/15/2024
News

On August 7, 2024, the Tax Court held that the S status of a corporation is not automatically terminated because of disproportionate distributions made to its shareholders. In Maggard v. Commissioner, TC Memo 2024-77, two of the three shareholders were embezzling funds by making unauthorized disproportionate distributions to themselves.

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None of the authors is rendering legal, accounting or other professional advice. If such advice is required, it is strongly recommended that a professional advisor be engaged.