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New Partnership Audit Rules: Should the Partnership Agreement be Amended?
By on January 31, 2019
In November 2015, as part of the Bipartisan Budget Act (BBA) of 2015, Congress enacted a new centralized partnership audit regime (PAR) to replace the TEFRA partnership rules. The PAR applies to all partnerships and, like TEFRA, IRS examinations and adjustments will be made at the partnership level. However, unlike TEFRA, the IRS will assess and collect tax from the partnership.
Opting Out of the New Partnership Audit Rules
By on January 30, 2019
In November 2015, as part of the Bipartisan Budget Act (BBA) of 2015, Congress enacted a new centralized partnership audit regime to replace the TEFRA partnership rules. The new partnership audit regime applies to all partnerships and, like TEFRA, IRS examinations and adjustments will be made at the partnership level. However, unlike TEFRA, the IRS will assess and collect tax from the partnership.
The Tax Balancing Act: Minimizing Estate Tax and Maximizing Income Tax Basis
By on January 25, 2019
The lifetime estate and gift tax exemption has risen more than 1600% over the past two decades. In 2017, with an exemption of $5,490,000, there were roughly 5,200 taxable estates but with an exemption of $11,180,000, that tally is expected to fall under 2,000 taxable estates for the 2018 tax year. As fewer estates are subject to federal estate tax, the intersection of estate tax planning and income tax planning is more pivotal than ever before.
Thoughts and Consideration Regarding the Designation of a Partnership Representative
By on January 23, 2019
In November 2015, as part of the Bipartisan Budget Act (BBA) of 2015, Congress enacted a new centralized partnership audit regime to replace the TEFRA partnership rules. The new centralized partnership audit regime is generally effective for partnership tax years beginning after December 31, 2017. As a result, the 2018 tax returns for most partnerships will be the first tax return filed under the new regime. One of the first questions partnerships, partners and tax professionals will face is determining who will be the Partnership Representative (PR). Although this would seem to be a simple question to answer, as explained below, it is much more involved than selecting a Tax Matters Partner (TMP) under the old TEFRA regime. This is especially true because any tax liability resulting from an IRS audit under the new centralized partnership audit regime is to be paid by the partnership in the current year, unless the PR takes affirmative steps otherwise. Failure by the PR to take action on a timely basis could result in a mismatch of tax burdens and tax benefits between current and former partners in a partnership.
IRS Updates Guidance on Disclosures and Accuracy Related Penalties
By on January 3, 2019
On December 20th, the IRS released Revenue Procedure 2019-9 providing guidance on whether disclosure of an item or position taken on a tax return is adequate for purposes of reducing or eliminating the Substantial Understatement of Income Tax Penalty (IRC Section 6662(d)) and the Return Preparer Penalty (IRC Section 6694(a)). Rev. Proc. 2019-9 updates Rev. Proc. 2018-11 and makes editorial but "no additional substantive changes". Rev. Proc. 2019-9 applies to any income tax return filed on 2018 tax forms for a tax year beginning in 2018, and to any income tax return filed in 2019 on 2018 tax forms for short tax years beginning in 2019.
