The Supreme Court upheld the mandatory repatriation tax as a valid exercise of Congress’s taxing authority. The Court did not reach the question of whether income must be realized to be taxable.
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Partnership & LLC taxation
IRS moves to end ‘shell game’ of basis-shifting transactions
The Service said it will release new proposed regulations and a revenue ruling to challenge the use of basis-shifting transactions used by complex partnerships in moves that could add over $50 billion to government coffers over 10 years.
Digital asset question added to more forms for 2023 tax returns
IRS adds a question about digital assets to forms covering partnerships, corporations, S corporations, and estates and trusts.
Prop. regs. issued on conservation easement deduction disallowance
The IRS on Friday issued proposed regulations providing guidance on the new rule that disallows charitable contribution deductions for certain conservation easement contributions by partnerships and other passthrough entities.
Ninth Circuit reverses its earlier holding in Seaview Trading
Rehearing the case en banc, the court determines that an LLC’s faxed and subsequently mailed copy of its late return were not filings that started an adjustment limitation period.
Bank deposits analysis upheld
The Tax Court rejects a taxpayer’s claim that the IRS’s reconstruction of his income included nontaxable proceeds from a real estate sale.
Accounting firm’s distributed clients are intangible assets
But related income allocations did not have substantial economic effect because the partnership did not properly maintain capital accounts, the Tax Court held.
Debt arrangement did not give rise to an interest in partnership equity
The Tax Court respects a property developer’s interest deductions despite the lender’s entitlement to a share of net profits.
FinCEN provides time estimates for compiling beneficial ownership details
FinCEN estimates that most companies will have a simple structure that will require 90 minutes per response, but complex entry filings will require much more time.
FinCEN proposes rules about access to beneficial ownership information
Proposed regulations under the Corporate Transparency Act address protocols for access to beneficial owner information by authorized recipients.
Prop. regs. to provide withholding relief on sales of foreign PTPs
The IRS announced that it will issue proposed regulations providing some relief to brokers that are required to withhold on the transfer of an interest in a publicly traded partnership (PTP) if the PTP is a foreign-traded entity.
Final regs. issued on centralized partnership audit regime
Final regulations, issued last week, except certain partnership-related items from the regime and provide alternative rules for their examination by the IRS, as well as provide rules for the calculation of imputed underpayments.
Domestic filing exception requirements modified in draft Scheds. K-2, K-3
Revised draft instructions for partnership and S corporation Schedules K-2 and K-3 contain significant changes to the requirements to qualify for the domestic filing exception for filing and furnishing the 2022 schedules.
Government seeks rehearing in Seaview partnership return filing case
The Ninth Circuit’s holding is ‘in serious tension’ with precedent and misconstrues regulations, the government argues.
Regulations streamline partnership basis elections
Final regulations issued by the IRS and Treasury allow a Sec. 754 election statement to be submitted without a partner’s signature.
IRS agent’s receipt of a copy of an LLC’s return constitutes its filing, Ninth Circuit holds
If a delinquent return is submitted to and received by an authorized IRS official requesting it, the return need not be sent to an IRS service center to be considered filed, the appellate court stated.
More Schedule K-2 and K-3 FAQs posted
In eight new FAQs on its website, the IRS covers some special issues, including several that it says will be added to the forms’ instructions.
BBA partnership audits show high no-change rate, TIGTA says
The Treasury Inspector General for Tax Administration recommends setting goals and benchmarks for the centralized audit regime under the Bipartisan Budget Act.
Grappling with Schedules K-2 and K-3
John Samtoy, CPA, discusses Schedules K-2 and K-3 for passthrough entities and U.S. persons who are partners in foreign partnerships, and how tax professionals can help clients with them.
AICPA again asks IRS to delay K-2/K-3 reporting
Comment letters from the AICPA and state CPA societies also offer further recommendations.
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