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Partnership Targeted Capital Accounts

Partnership Targeted Capital Accounts: Part III

Introduction Part I of this article described the overall concept behind the targeted capital account approach to allocating taxable income and loss. Part II presented a general example of how a targeted capital account analysis functions when a partnership agreement provides for preferences with respect to partnership distributions. This Part III will address a variety…

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Tax Reform Legislation: Impacts on the Real Estate Industry

Tax Reform Legislation: Impacts on the Real Estate Industry     House vs. Senate Bill Specific to Real Estate Industry   House Senate Tax Rates on Pass-Through Entities 25% maximum tax rate on qualified business income (QBI) of partnerships, S corporations, and sole proprietorships; QBI is 100% of net business income from passive activities and…

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Tax Reform Legislation will Overhaul NOL Provisions

Both the House and Senate versions of tax reform propose significant changes to the treatment of net operating losses (NOLs). The current tax code generally allows a two-year carry back deduction of NOLs and a carry forward of 20 years to offset future income.   The House bill proposes the following changes: NOLs cannot offset…

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tax-reform-timeline

Tax Reform Timeline

Everyone is wondering how Tax Reform will be on President Trump’s desk before Christmas. Here is an estimated timeline as of 11/16/2017 according to the goals of Congress and the White House.   Sprint to Tax Reform 11/2/2017                House Bill revealed 11/9/2017                Senate…

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Tax Reform Loophole

Potential Pass-Through Entity Loophole in Tax Reform

● The Tax Cut and Jobs Act proposes setting a maximum tax rate of 25% on pass-through business income. While lawmakers intend to benefit small business owners with the new, lower tax rate, many are concerned that certain individuals will abuse the provision by re-categorizing wage income taxed at a maximum 39.6% rate as pass-through…

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Partnership Taxes

Partnership Targeted Capital Accounts: Part II

Partnership Targeted Capital Accounts: Part II Introduction Part I explained the basic concept behind the targeted capital account approach to allocating partnership taxable income and loss. The example used in Part I assumed a simple factual pattern where the partnership admitted a partner on 12/30/2017 in exchange for a $200,000 capital contribution. The example explained…

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Partnership Targeted Capital Accounts: Part 1

Introduction Traditionally partnership agreements allocate income, gain, and loss by formula and provide for liquidating distributions based on the partners’ respective positive capital account balances. Such arrangements help ensure that the allocations comply with the “safe harbor” provisions set forth in the Treasury regulations under Internal Revenue Code (“IRC”) §704(b). Increasingly, however, partnership agreements provide…

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Presidential Tax Reform Framework

New Presidential Tax Reform Framework

Tax Reform Framework Released by Trump Administration and its Congressional Allies On September 27th, the Trump administration, the House Committee on Ways and Means, and the Senate Finance Committee released a unified framework with the stated intent to achieve “pro-American, fiscally-responsible tax reform.” The framework expounds upon the four principles of tax reform released by…

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IRS Tax Regulations

Transfer of Intangibles to Foreign Corporations IRS Regulations

Final IRS Regulations on Transfers of Intangibles to Foreign Corporations On December 16, 2016, the Internal Revenue Service (IRS) published final regulations regarding transfers of intangible assets, including goodwill and going concern value, by U.S. persons to foreign corporations. These new regulations modify regulations under Internal Revenue Code (IRC) §§367(a) and (d) to ensure that…

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IRS Relief For Hurricane Harvey Victims

IRS to Provide Relief for Those Affected by Hurricane Harvey Due to Pres. Trump’s major disaster declaration for the state of Texas in response to Hurricane Harvey, the Internal Revenue Service (IRS) has announced that tax relief will be made available to those affected by the storm. Specifically, the IRS will be postponing certain deadlines…

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