Partnerships

News & Analysis as of

The End of Leveraged Partnership Transactions?

If a partner contributes property to a partnership, and within a two year period, receives cash from that partnership, the tax rules generally treat that as a disguised sale of property by the partner to the partnership. ...more

Valuation Discounts to Family-Controlled Entities in Peril Under Proposed IRS Regulations

On August 4, the Internal Revenue Service finally issued much anticipated proposed regulations under Section 2704 of the Internal Revenue Code, which regulations are intended to significantly limit taxpayers' ability to apply...more

Focus on Tax Controversy and Litigation - The Unprecedented Extraterritorialization of Tax Crimes

In addition to the discussion of the recently proposed U.K. criminal tax legislation, this month’s issue features articles regarding the Tenth Circuit Court decision in McNeill v. United States discussing a managing partner’s...more

Proposed changes to Section 2704 could spur tax increase for owners of closely held businesses

Controversial proposed regulations issued by the Treasury and the IRS on August 4, 2016, would change rules for valuing interests in business entities of which a person or a family owns at least one-half. The regulations...more

Court Rules Coequal Stockholders Owe Fiduciary Duties To Each Other

Stockholders in closely held corporations often operate their companies as if they were partnerships. Does that mean that the stockholders, like partners, owe fiduciary duties to each other?...more

Proposed Tax Regulations Limit Availability of Valuation Discounts to Family Business Owners

For family business owners who desire to transfer ownership of part of their business to the next generation, the valuation of the business interest is often an important factor to consider. This is especially true for family...more

IRS Proposes New Rules Designed to Restrict Valuation Discounts in Family Transfers

Partnerships and LLCs are common choices of entity for family-owned businesses, due to their flexibility and the many uses to which they can be put – including pooling of family assets, succession planning, asset protection,...more

Canadians Who Invested in U.S. LLPs and LLLPs Need to Rethink Their Choice of Entity

Historically, Canadian investors in U.S. partnerships benefitted from an extremely efficient income tax structure – i.e., a single level of tax, credit against Canadian taxes for taxes paid in the U.S., and an ability to...more

Proposed Treasury Regulations Regarding Valuation Discounts for Transfers of Family-Controlled Entities, if Enacted, Would Apply...

After years of anticipation, the U.S. IRS recently issued Proposed Treasury Regulations that would, if enacted in their current form, substantially eliminate most valuation discounts for family-controlled entities and result...more

The End of Valuation Discounts in Estate Tax Planning?

Families with interests in closely held entities have long benefitted from reduced estate and gift tax exposure due to valuation discounts. If regulations proposed by the Internal Revenue Service are adopted in their present...more

Family-Controlled Businesses -- Tax Targets Again: Newly Proposed 2704 Regulations and Presidential Candidates' Positions

It's August of an election---year, and not just any election---year, a presidential election year. So, in less than 80 days, we'll all go to the polls and elect a new president. While Benjamin Franklin might have been right...more

The End to Discounts for Transfers of Interests in Family Business Entities

The ability to use transfer and liquidation restrictions in legal documents to reduce the value of an interest in a family-controlled (or “closely-held”) business entity (e.g., partnership, corporation, limited liability...more

Proposed Treasury Regulations Would Severely Limit Valuation Discounts

Earlier this month, the U.S. Department of the Treasury unveiled its long-awaited proposed regulations targeting valuation discounts commonly used in estate planning, thereby overturning decades of settled law. As drafted,...more

How to Use a Joint Venture to Spur Growth

We’ll never forget Don Vito Corleone’s chilling line: “I’m gonna make him an offer he can’t refuse.” Sure, it made for a good movie, but if you think business is about fighting off opposition at any expense, it’s time to turn...more

Proposed Rules Would Limit Valuation Discounts for Family Controlled Entities

On August 2, 2016, the Internal Revenue Service proposed regulations that would severely limit valuation discounts for lack of marketability and lack of control that taxpayers have historically applied for federal gift,...more

IRS Proposes Rules That Would Dramatically Reduce Valuation Discounts in Family Business Succession Planning

Business Owners May Have Little Time to Act Before Rules Are Finalized - The valuation of a family member's interest in a family business has a major impact on the success or failure of a transfer of such interest to...more

IRS Proposes New Regulations That Will Significantly Limit the Use of Valuation Discounts on Transfers of Interests in Closely...

The proposed regulations disregard restrictions that have been used by valuation experts and acknowledged by the courts to reduce valuations. If you are an owner of a closely held entity, recently proposed Treasury...more

Proposed Section 2704 Regulations

On August 2, 2016, the Treasury Department released proposed regulations amending and expanding upon the current regulations to Internal Revenue Code Section 2704. The proposed regulations, if adopted, would affect the...more

Proposed IRS Rules Endanger Business Valuation Discounts for Family-Owned Entities

Historically, the IRS has closely scrutinized transfers of interests in family-owned entities between family members. In particular, it has sought to curtail the use of discounts to decrease the estate and gift tax value of...more

Is an S Election for an LLC Smart Planning or a Bad Idea?

By default, a limited liability company (“LLC”) with two or more members is taxed as a partnership. It also is possible to elect to treat an LLC as an S corporation for income tax purposes. But is it a good idea? And if an S...more

Proposed Regulations May Substantially Reduce the Availability of Valuation Discounts for Interfamily Transfers of Business...

On August 2, 2016, the Treasury Department published Proposed Regulations to Chapter 14 of the Internal Revenue Code which, if adopted, may substantially reduce the availability of valuation discounts for inter-family...more

Federally Proposed Rules to Increase Tax Cost of Family-Entity Transfers

The federal government proposed sweeping new tax rules earlier this month that would dramatically affect family businesses, investment partnerships and other entities.  These rules, which have been widely reported, would...more

Opting-In: Treasury Regulations Provide Rules for Electing into the New Partnership Audit Regime Early

As reported in a prior Sutherland Legal Alert, the Bipartisan Budget Act of 2015 (the 2015 Budget Act) makes significant changes to the procedural rules governing federal income tax audits and judicial proceedings that apply...more

Practice Aid – A Redlined Version of the Proposed Section 2701 and 2704 Regulations

These proposed regulations are difficult enough in substance to deal with, without having to piece together the changes that they make to the existing regulations. Maybe there is a redlined version out there already, but I...more

High Net Worth Family Tax Report, Vol. 11, No. 2

IRS Seeks to Limit Valuation Discounts for Family-Controlled Entities: Proposed Section 2704 Regulations - Proposed regulations issued on August 2, if finalized in their present form, will significantly limit the ability...more

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