Complete Story
12/12/2024
IRS Cracks Down on Partnership Tax Strategies
Proposed regulations will provide new rules related to partnership provisions
The Internal Revenue Service (IRS) has unveiled a new multistage regulatory initiative aimed at addressing what it describes as a "significant tax loophole" often utilized by large, intricate partnerships. This effort stems from the agency's concern that certain partnerships may be leveraging transactions with related parties to significantly reduce their tax liabilities inappropriately.
Tactic in the IRS' Crosshairs
The key area of concern for the IRS is referred to as basis-shifting transactions. In these arrangements, a single business that operates through many different legal entities enters into a series of transactions. The goal is to leverage partnership tax rules to reduce taxable income, thereby minimizing tax liability. This strategy takes advantage of rules that govern when a partnership can receive a basis step-up in assets that would allow for:
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Additional depreciation, or
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Reduced taxable gain or increased taxable loss on disposition.
Please select this link to read the complete article from OSAP Mission Partner Clark Schaefer Hackett (CSH).
