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Notice 2018-29, provides interim guidance under new Code Sec. 1446(f) regarding withholding matters on the disposition of a partnership interest by a foreign person. The guidance generally adopts the forms and procedures relating to withholding on dispositions of US real property interests under Code Sec. 1445 and the regulations thereunder. The 2017 Tax Act enacted Code Sec. 864(c)(8), which provides that gain or loss from the sale, exchange, or other disposition of a partnership interest by a non-resident alien or foreign corporation is income effectively connected with the conduct of a trade or business (\"ECI\") to the extent that the person would have had ECI had the partnership sold all of its assets at fair market value. Code Sec. 864(c)(8), effective for dispositions occurring on and after November 27, 2017, overturns Grecian Magnesite Mining, Industrial & Shipping Co, SA, which held that the sale by a foreign person of its interest in a partnership engaged in a US trade or business was not subject to US tax.

Forst discusses proposed regulations under Code Sec. 864(c)(8). Treasury and the IRS issued proposed regulations under Code Sec. 864(c)(8). Code Sec. 864(c)(8), which was added to the Code by the 2017 Tax Cuts and Jobs Act, generally overturns the result of Grecian Magnesite Mining, by providing that gain or loss of a nonresident alien individual or foreign corporation from the sale, exchange, or other disposition of partnership interest is treated as effectively connected with the conduct of a trade or business within the US (ECI) to the extent that the transferor would have had ECI gain or loss if the partnership had sold all of its assets at fair market value as of the date of the sale or exchange. The proposed regulations do not provide guidance under Code Sec. 1446(f ), and the preamble states that proposed regulations under Code Sec. 1446(f ) will be forthcoming.

Outside of Code Sec. 704(c), however, particularly in the assignment of income doctrine, the tax system shows discomfort with the shifting of tax burdens regardless of the tax profiles of the taxpayers involved.' [...]we explore other possible modifications to the basic Code Sec. 704(c) scheme, and discuss several crucial (and a few not so crucial) improvements to the mechanical functioning of the current system that would promote both good tax administration and the policies underlying Code Sec. 704(c). B. History and Development of Code Sec. 704(c) Code Sec. 704(c)(1)(A),\" added to the Code in its current form in 1984, provides that \"income, gain, loss, and deduction with respect to property contributed to the partnership by a partner shall be shared among the partners so as to take account of the variation between the basis of the property to the partnership and its fair market value at the time of contribution.\" [...]both the Board of Tax Appeals and the Second Circuit held that a partnership takes a fair market value basis in contributed property, with the Second Circuit intimating that built-in gain would remain untaxed until the liquidation of the partnership'· - even in cases where the property is sold by the partnership in the interim!\" Nonrecognition for partnership contributions took longer to solidify, being at first unnecessary because of the Services somewhat tortured view that partnership contributions were generally open transactions and thus no realization occurs on property contributions.'· The sharing of income, gain, loss, and deduction from contributed property is perhaps the most foundational of the three, but early thinking on the subject explored keeping pre-contributions \"basis derivative\"'· items outside the partnership, at least in some cases.\"

On Mar 25, 2016, the IRS published three substantially identical private letter rulings (LTR) that address the application of Code Sec. 267(d) following a related-party sale of a partnership interest in which a loss is disallowed by Code Sec. 707(b)(1)(A). Without revealing any client confidences, this column will discuss the LTRs and the policy considerations that led the IRS to rule favorably. Different provisions of subchapter K of the Code adopt either an aggregate or entity theory of partnership taxation. While it is clear that the flush language of Code Sec. 707(b)(1) and Code Sec. 267(d) must apply in some manner to gain recognized after the disallowed loss, it is unclear whether these provisions should be applied based on the aggregate theory or entity theory of partnership taxation. The authors applaud the IRS for appropriately applying the aggregate theory of taxation in the LTRs and allowing gains on sale of the partnership's assets to be offset by loss disallowed on the earlier sale of the partnership interest.

Partnerships form in order to take advantage of complementary skills; however, new opportunities may arise that make some partners' skills useless. We analyse partnerships that anticipate possible dissolution under the most commonly advised and widely used dissolution rule known as ‘buy–sell provision’. We find that this rule assures neither ex post efficient dissolutions nor ex ante efficient investments. We also discuss whether renegotiations, supplementing the buy–sell provision with the right to veto, or allowing the uninformed partner to set the dissolution price may restore efficiency, and whether pre-emptive requests for dissolution occur in equilibrium.

On November 6, 2020, the Treasury Department and the IRS published final regulations (TD 9919) under section 864(c)(8) in the Federal Register (85 FR 70958) (the final section 864(c)(8) regulations). Sections VI.A and VII.C of this Summary of Comments and Explanation of Revisions also describe certain requirements specific to entities acting as qualified intermediaries for section 1446 withholding purposes that are anticipated to be included in a revised qualified intermediary agree- ment and that are not included in these final regulations.1 II.Reporting Requirements for Foreign Transferors and Partnerships with Foreign Transferors Proposed 1.864(c)(8)-2 provided rules that facilitate the transfer of information between a foreign partner and the partnership whose interest is transferred for purposes of determining the transferor's tax liability under section 864(c)(8). While the final section 864(c)(8) regulations generally require a three-year lookback period for purposes of determining the foreign source portion of deemed sale gain or loss attributable to a partnership's inventory property or intangibles, the regulations also allow, in certain cases, the relevant foreign source portion of deemed sale gain or loss to be determined by reference to the source of the partnership's income occurring after the date, if any, on which a material change in circumstances occurs. 1.864(c)(8)-1(c)(2)(ii)(E). The final regulations provide that a specified partnership must include in the statement provided to the notifying transferor information regarding whether the transferor's deemed sale EC gain or loss (as described in 1.864(c)(8)-1(c)(2)) was determined under the material change in circumstances rule provided in 1.864(c)(8)-1(c)(2) (ii)(E).

With President Joe Biden's administration wanting to reduce the tax gap - the estimated annual amount of taxes owed but unpaid - of as much as $1 trillion and to provide the IRS with $80 billion in additional funding, partly to do so, taxpayers and their advisers should be aware that the nation may be entering a new tax enforcement era (testimony of IRS Commissioner Charles Rettig to the Senate Finance Committee, April 13, 2021; Treasury, The American Families Plan Tax Compliance Agenda, May 2021, pp. 1 and 16). A taxpayer has participated in a listed transaction if the taxpayer's return reflects, or the taxpayer knows or has reason to know, that the taxpayer's tax benefits are derived directly or indirectly from tax consequences or a tax strategy described in IRS guidance as a listed transaction (Regs. Transactions with contractual protection Transactions with contractual protection are transactions for which taxpayers or related parties (Sec. 267(b) or Sec. 707(b)) have contractual protection (including contingent fees) that provide for a full or partial refund (rights to reimbursements) if the intended tax consequences are not achieved. To be considered complete, the information provided on Form 8886 must: * Describe the expected tax treatment and all potential tax benefits expected to result from the transaction; * Describe any tax result protection (as defined in Regs.

Activehours relieves stress and financial strain in an innovative way, and we are excited to help the company scale to help more workers.\" Since launching in 2014, Activehours has grown from working with people from 100 companies to working with individuals from over 12,000 companies. Google Play Store: https://play.google.com/store/apps/details?id=com.activehours iTunes Store: https://itunes.apple.com/us/app/activehours-unlock-your-pay/id723815926?mt=8 About Activehours Activehours is the new, faster way to get paid.

The US Tax Court recently declined to follow the longstanding position of the US Internal Revenue Service (IRS), articulated in Revenue Ruling 91-32,1 that a non-US partner's gain or loss from the disposition of an interest in a partnership that is engaged in a US trade or business will be subject to US net income taxation as \"effectively connected income\" to the extent attributable to unrealized appreciation in underlying partnership assets employed in that US trade or business.2 Provided that the decision is not overturned on appeal3 or through legislative or regulatory action, the decision significantly alters the US tax consequences of the disposition of partnership interests by non-US persons and may impact the structuring of investments by non-US persons in partnerships that are engaged in a US trade or business. Under Section 875(1) of the Internal Revenue Code (the Code),4 a non-US person that invests in a partnership generally is treated as engaged in a US trade or business to the extent the partnership is so engaged. [...]a non-US partner, even though not directly engaged in a US trade or business, may be subject to tax on allocations of US-source operating income to the extent effectively connected with the partnership's US trade or business. [...]subject to certain exceptions, the Code's partnership tax rules appear generally to treat the disposition of a partnership interest as the disposition of a unitary capital asset (that is, the gain or loss realized upon the disposition of a partnership interest is generally determined solely by reference to the partnership interest rather than the underlying assets). [...]the Code's sourcing rules may be interpreted as treating a non-US partner's income from the disposition of the partnership interest as foreign source and hence not as ECI subject to US federal net income taxation. The court noted that to hold otherwise would render certain other Code provisions superfluous, such as Section 751 (treating amounts received in exchange for a partnership interest potentially as ordinary income to the extent attributable to unrealized receivables or inventory items of the partnership) and Section 897(g) (treating amounts received by a non-US person in exchange for a partnership interest as subject to the Foreign Investment in Real Property Tax Act (FIRPTA) (and hence ECI) to the extent attributable to US real-property interests held by the partnership).