Texas Franchise Tax Filing Changes for Passive Entities

The Texas Comptroller of Public Accounts recently issued amendments to Title 34 of the Texas Administrative Code §3.582 relating to the filing requirements for the Texas franchise tax for passive entities. These new rules went into effect on June 28, 2016. We will begin our discussion by defining what is considered a passive entity in…

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Foreign Pension Funds And Your Partnership

Exemption from FIRPTA Withholding and Tax under IRC §897 for Qualified Foreign Pension Funds Not Applicable to IRC §1446 Qualified foreign pension funds are not exempt from U.S. withholding tax on foreign partners’ share of U.S. effectively connected income. As discussed in our March 1, 2016 blog post (Path-Act), the Protecting Americans from Tax Hikes…

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Are Partnership Business Structures On The Rise?

Partnership Business Structures Expected to Continue Tremendous Growth According to Clifford M. Warren, special counsel to the IRS associate chief counsel of Passthroughs and Special Industries, the IRS has seen tremendous growth in partnership business structures, including joint venture partnerships between large corporations and startups, managed-fund partnerships, energy partnerships, financial services partnerships and publicly-traded partnerships.…

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Proposed Legislation Could Mean A Tax Break For You

Proposed congressional legislation would create tax parity among pass-through and corporate income tax rates. Rep. Vern Buchanan (R-FL) has recently introduced the Main Street Fairness Act which would link the top marginal tax rate paid on pass-through business income to the corporate tax rate. Buchanan is a senior member of the tax-writing House Ways and…

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PATH Act: Changes to Dispositions of Foreign Investments

PATH Act: Changes to Dispositions of Foreign Investments in U.S. Real Property under IRC §§ 897 and 1445 Introduction The Protecting Americans from Tax Hikes Act of 2015 (PATH Act), Pub. L. No.114-113, made changes to the income tax and withholding which nonresident aliens and foreign corporations are subject to upon the disposition of interests…

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Partnership Profits Interest Taxation

Potential Taxation on Grant of a Partnership Profits Interest for Services Rendered: Part II Introduction Part I of the article explained why a grant of a partnership interest for services only entitling the recipient to a portion of future partnership cash flow can result in an immediate taxable event to that service partner. More specifically,…

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Consolidated Appropriations Act 2016 Could Effect You

The recently enacted 2016 Consolidated Appropriations Act, Pub. L. No. 114-113, extends, modifies, and/or adds numerous business-related provisions that affect business of all sizes. Below is just a few of the many changes. Depreciation, and Other Provisions Extended and/or Modified • Increased expensing limitations and treatment of certain real property as § 179 property -The…

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Potential Partnership Taxation Scenario

Potential Taxation on Grant of a Partnership Profits Interest for Services Rendered Overview Under general principles of income taxation the receipt of cash or property in exchange for the provision of services produces taxable income to the service provider. If the service provider receives property (tangible or intangible) in return for services the provider general…

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Proposed Regulations – Disguised Payments

New Proposed Regulations Concerning Disguised Payments to Partners for Services: Part II (Targeted Capital Accounts) Background Our August 6th article, “Proposed Regulations Concerning Disguised Payments to Partners”, described the new proposed regulations that treat certain payments to service partners as compensatory payments rather than as partnership distributions.  The proposed regulations particularly focus on the amount…

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Regulations Concerning Disguised Payments To Partners

New Proposed Regulations Concerning Disguised Payments to Partners for Services Background A partner can act in more than one capacity with respect to its partnership, that of a partner or that of a third-party.  For example, if a partner contributes property to the partnership in exchange for an increased ownership interest the transfer represents a…

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