Partnerships

News & Analysis as of

Obligation to Perform Work and Incur Costs Under Construction Contract is a Section 752 Liability

In a recently issued Private Letter Ruling (PLR 201608001), the IRS determined that a taxpayer-partnership’s obligation to perform work and incur costs under a long-term construction contract constituted a partnership...more

Changes to IRS Partnership and LLC Audit Rules

Recent history has seen a proliferation of health care organizations—including tax-exempt organizations, for-profit companies, and physician practice groups—that have joined together to take advantage of different synergies...more

IRS Withdraws Controversial Pronouncement on “Bad Boy” Guarantees

In a client advisory dated February 25, 2016, we described a legal memorandum released by the Office of Chief Counsel of the Internal Revenue Service (the “Memorandum”) which took the position that a typical “carve-out” or...more

What Law Governs A Foreign General Partnership?

The California Uniform Partnership Act of 1994 defines a “partnership” to mean “an association of two or more persons to carry on as coowners a business for profit formed under [Cal. Corp. Code] Section 16202, predecessor...more

Appellate Court Notes

Supreme Court Advance Release Opinions: SC19408 - NPC Offices, LLC v. Kowaleski - In this case, the Supreme Court reversed the Appellate Court. The Appellate Court had agreed with the Trial Court that a driveway...more

New Partnership Tax Audit Rules

The Bipartisan Budget Act of 2015 establishes new rules (the “New Partnership Audit Rules”) for the conduct of federal income tax audits of partnerships and the assessment and collection of income taxes resulting from such...more

A Reminder That Modern Large Partnerships are Still Partnerships

Large law and accounting firms ostensibly bear little resemblance to traditional, small-scale partnerships. Nevertheless, in the recent Ontario Superior Court decision in Tim Ludwig PC v BDO Canada LLP, 2016 ONSC 2225, a...more

Potential Refund Opportunity: Recent Michigan Business Tax Ruling Clarifies the Meaning of ‘Indirect’ Ownership

The Michigan Court of Appeals has held that Treasury cannot use the constructive ownership rules of IRC § 318 to determine whether a group of entities meets the threshold for mandatory combined reporting under the Business...more

Sun Capital Partners on Remand: District Court Rules that Related Funds Formed a Partnership-in-Fact Engaged in a Trade or...

In a recent decision with important implications for private equity funds and their sponsors (Sun Capital Partners v. New England Teamsters), the U.S. District Court for the District of Massachusetts concluded that two...more

Private Equity Funds Liable for Withdrawal Liability of Portfolio Company

What you need to know: On March 28, 2016, the US District Court for the District of Massachusetts held, on remand from the First Circuit, that two related private equity funds were jointly and severally liable for...more

IRS Sets Short Fuse for Comments, Guidance on New Partnership Audit Rules

As if it wasn’t going to be busy already, the Internal Revenue Service (“IRS”) has set Tax Day, April 15, 2016, as the due date for comments on significant new partnership audit rules. This new law, which was enacted as part...more

Partnership Audits of Private Equity Firms on the Rise

There has been buzz in the tax and private equity communities about the rise in audits of private equity firms by the Internal Revenue Service (“IRS”). This has been fueled by the restructuring of the IRS’ Large Business &...more

Predicting How the New Partnership Audit Rules Will Affect S Corporations and Their Shareholders

This column has three focal points: S corporations (of course!), the new partnership audit procedures and Jeanne Dixon. Yes, that Jeanne Dixon—the self-professed psychic who claimed to have predicted the assassination of...more

Changes to IRS Partnership and LLC Rules

You may have heard that the IRS’s ability to audit partnerships (including multi-member LLCs) will be greatly enhanced due to changes made by the recent Bipartisan Budget Act of 2015. The IRS will be ramping up its...more

Global Private Equity Newsletter - Spring 2016 Edition: Recent Changes to Rules Governing Tax Audits of Partnerships

Congress recently amended the rules governing tax audits of partnerships that file U.S. partnership returns, including U.S. partnerships (and limited liability companies treated as partnerships) and certain non-U.S....more

The PSC Regime

What is the PSC regime? From 6 April 2016, the main provisions of Part 21A of the Companies Act 2006 take effect and most companies registered in the UK must keep a register of all persons who have significant control...more

Incorporating a Partnership to Take Advantage of the Qualified Small Business Stock Rules (Update)

This is an update to a 2013 Legal Alert by Bahar Schippel and Bill Kastin titled: Excluding 100% of Gain From the Sale of Qualified Small Business Stock Acquired in 2013. Among the tax breaks included under the...more

The IRS Releases CCA 201606027

On February 5, 2016, the Internal Revenue Service (IRS) released Chief Counsel Advice 201606027 (the 2016 CCA) in which the IRS concluded, among other things, that guarantees by a partner of a partnership’s liabilities that...more

2015 Georgia Corporation and Business Organization Case Law Developments

This survey covers the legal principles governing Georgia businesses, their management and ownership. It catalogs decisions ruling on issues of corporate, limited liability company and partnership law, as well as transactions...more

Tax Treatment of “Bad Boy Guarantees” Challenged by Recent IRS Memorandum

I. OVERVIEW - A recently released legal memorandum by the Internal Revenue Service (IRS) Office of Chief Counsel, CCA 201606027 (the “Memorandum”), concluded that a so-called “bad boy guarantee” provided by a sponsor of...more

"Corporate Finance Alert: SEC Staff Issues Rule 144 Guidance Related to REIT Shares Received in Exchange for Operating Partnership...

The staff of the SEC’s Division of Corporation Finance recently issued an interpretive letter concluding that, for purposes of Rule 144 under the Securities Act, the holding period for shares of a publicly traded real estate...more

When is a payment arrangement treated as disguised compensation?

The proposed Department of Treasury regulations (REG-115452-14) under IRC section 707(a)(2)(A) set forth standards to determine when a payment arrangement to a partner shall be treated as disguised compensation. Section...more

Beware New IRS Partnership/LLC Audit and Assessment Rules

You may have heard that the IRS’s ability to audit partnerships (including multi-member LLCs) will be greatly enhanced due to changes made by the recent Bipartisan Budget Act of 2015. The new rules apply to tax years...more

Oregon Tax Compliance Alert – Reduced Tax Rates May Be Available to Taxpayers for Non-Passive Income That Flows Through From...

As reported in my November 2013 blog post, for tax years beginning in 2015 or later, under ORS 316.043, applicable non-passive income attributable to certain partnerships and S corporations may be taxed using reduced tax...more

Court Of Chancery Limits Fiduciary Claims Based On A Contract

A recurring problem in Delaware jurisprudence is whether breach of contract and fiduciary duty claims may proceed simultaneously....more

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