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By on May 9, 2016
As discussed in a recent blog post, a new partnership audit regime that was enacted as part of the Bipartisan Budget Act of 2015 (the "Partnership Audit Rules") will have significant, wide ranging effects on the taxation of income from partnerships. Under the Partnership Audit Rules, the general result (the "General Method") is that the tax liability resulting from an Internal Revenue Service ("IRS") audit adjustment to a partnership's income will generally be assessed and collected directly from the partnership. See I.R.C. § 6221 (2018). This is obviously a significant departure from the result under the partnership audit rules that are currently in place through year-end 2017 (the "TEFRA Rules"), under which an adjustment is made at the partnership level, but the resulting tax liability is assessed and collected from the partners of the partnership.
Master Limited Partnerships and Cancellation of Indebtedness Income
By on May 6, 2016
A Master Limited Partnership ("MLP") is an investment vehicle used in oil and gas, and several other industries. MLPs are designed to avoid corporate level taxation; however, this comes at a price that many investors have not anticipated.
Texas Bar Tax Section Issues Comments Regarding New Partnership Audit Rules
By on May 3, 2016
On April 26, 2016, the Tax Section of the State Bar of Texas ("Tax Section") submitted to the Internal Revenue Service comments (the "Comments") regarding the implementation of the new partnership audit regime (the "Partnership Audit Rules") that was enacted as part of the Bipartisan Budget Act of 2015. Stephen Beck of Meadows Collier participated as a principal drafter of the Comments in his capacity as Vice Chair of the Tax Section's Partnerships and Real Estate Committee.
The Clock is Ticking: U.S. Government Officials Investigate Panama Papers
By on May 2, 2016
Panama has long been known as a favorite country for many taxpayers on account of its low tax rates and strict confidentiality laws, the latter of which serve to protect the identities of Panamanian corporate shareholders and bank account holders in the case of frivolous civil litigation. Accordingly, it should come to no one's surprise that many non-Panamanian citizens take advantage of these low rates and confidentiality laws by creating Panamanian entities and utilizing the Panamanian banking system. Until recently, no one really knew how prolific the use of these entities was by non-Panamanian citizens or the extent to which they may be used by persons to avoid detection by taxing authorities and other governments. However, on April 3, 2016, the world got a glimpse of all of the above when a treasure trove of business records and documents relating to the formation and operation of Panamanian companies was released by hundreds of journalists from across the globe.
