Partnership Centralized Audit Rules Enacted in 2015 Having a General Start Date For Taxable Years Beginning January 1, 2018 The Bipartisan Budget Act of 2015 (the “Budget Act”) which the President signed into law on November 2, 2015 (as modified by the Protecting Americans from Tax Hikes Act of 2015 (the “PATH Act”), fundamentally changes how the Service will conduct audits of partnerships. The Budget Act repeals the partnership audit provisions of the Tax Equity and Fiscal Responsibilit… Read More

Estate of Andrew J. McKelvey, Deceased, et al v. Commissioner, 148 T.C. No. 13, April 19, 2017 The decedent, Andrew J. McKelvey, was the founder and CEO of Monster Worldwide, Inc. (Monster.com), a company known for its job placement website. Mr. Mc Kelvey died on November 27, 2008. The IRS issued a statutory notice of deficiency of approximately $41,257,00 in income tax for 2008. The only issue for the Court was whether modifications made in 2008 to the decedent’s variable prepaid forward cont… Read More

This post is the third of a Three Part Series of K&F Business and International Tax Developments Posts on the Proposed Regulations to the New Partnership Audit Regime which legislation is due to go into effect for all unincorporated entities treated as partnerships, in general, for taxable years beginning after December 31, 2017. Part One, which was posted on February 17, 2017, summarized the legislation which enacted the new partnership audit rules as part of The Bipartisan Budget Act of 20… Read More

This will be Part One of a Three Part Series of Posts on the New Proposed Regulations; This Part One Will Focus on the Background to the Proposed Rule-making, Qualifications for Electing-Out, the Designation of the Partnership Representative and Related Items. Part Two Will Focus on the Imputed Underpayment Rules and Modifications while Part Three Will Address the Push-Out Election and Other Procedural Rules. Read More

This post is part of a Three Part Series of K&F Business and International Tax Developments Posts on the New Proposed Regulations to the New Partnership Audit Regime which is due to go into effect for all unincorporated entities treated as partnerships for taxable years beginning after December 31, 2017. Part One, which was posted on February 17, 2017, summarized the legislation which enacted the new partnership audit rules as part of The Bipartisan Budget Act of 2015, Pub. L. No. 114-74, Ac… Read More

In a recent private letter ruling issued on November 18, 2016, PLR 201710007, the Service ruled that the transfer of a stock portfolio to a surviving partnership from four terminating partnerships will not, under the facts, result in a diversification of portfolios under §721(b) thereby avoiding gain recognition. This provision may pose a trap for the wary for taxpayers who do not give careful consideration in transferring appreciated property to a partnership (or corporation). The Service furt… Read More

An Instance Where the Business Taxpayer Can Win Despite the Absence of Economic Substance !!! In Summa Holdings Inc. v. Commissioner, No. 16-1712 (Feb. 16, 2017), the Sixth Circuit Court of Appeals reversed the Tax Court decision below which held that payments a corporation made to a DISC were not DISC commissions but instead were to be characterized as dividends to shareholders followed by excess contributions to their Roth IRAs. Such recharacterization would have eliminated the tax benefits as… Read More

A bill, H.R. 5, recently introduced by House Judiciary Committee Chair Bob Goodlatte, R-Va., the Regulatory Accountability Act of 2017, proposes to end the Chevron deference doctrine, passed the House of Representatives by a 50 vote majority (283-183) on January 11. The bill was referred to the Committee on the Judiciary, in addition to the Committee on Oversight and Government Reform and the Committee on Small Business. Read More