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HWH Tax Alerts


January 23, 2020

IRS Delays Partnership Reporting Requirements with its Release of Notice 2019-66

On December 9, the IRS issued Notice 2019-66 in response to heavy criticism of certain partnership tax reporting requirements that it had proposed in the Fall of 2019. In particular, the IRS had sought to mandate partnerships’ reporting of partners’ “tax basis capital,” “net unrecognized Section 704(c) gain or loss,” and “Section 465 At Risk Activities,” which various practitioners argued were ambiguous terms of art and/or would require more time to determine than the IRS had allowed for. This article provides background regarding the changes to partnership tax reporting on Schedule K-1 that were previously proposed and discusses the IRS’s recent decision to hold off on implementing them until 2020, as well as other modifications to the Service’s original proposals.

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October 1, 2019

Implications of the TCJA for Bonus Depreciation in the Partnership Context

On September 13, 2019, the Treasury Department and the IRS released final regulations under Code Section 168(k), adopting (with some modifications) previously proposed regulations regarding revisions to the bonus depreciation regime made by The Tax Cuts and Jobs Act of 2017 (“TCJA”). The final regulations consider, among other things, certain implications of the new rules for the application of bonus depreciation in the partnership context. 

The discussion that follows summarizes aspects of the final regulations that address the extent to which partnership special basis adjustments (under Code Sections 734(b) and 743(b)) and remedial allocations (under Code Section 704(c)) will be eligible for bonus depreciation following enactment of the TCJA.  In addition, the material below discusses special rules that govern application of additional first-year depreciation in situations where property is acquired, placed in service, and contributed to a partnership, all in the same taxable year.

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July 2, 2019

Inaugural Partnership Tax Matters Alert

The Tax Cuts Jobs Act of 2017 made numerous changes to the federal income tax law which have a significant impact on the taxation of partnerships and their partners. One area of particular importance which has yet to be fully clarified is the manner in which the business interest limitation of Code Section 163(j) is applied in the partnership context. The Treasury Department has issued proposed regulations under Code Section 163(j) which, while providing much needed guidance, also leave several key issues unresolved. The following article provides a detailed analysis of the business interest limitation of Code Section 163(j) and its application in the partnership context.

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November 13, 2017

2017 Tax Reform: Senate Proposal and Amendments to House Bill


On November 9, 2017, Senate Finance Committee Chair Orrin Hatch (R-UT) released his mark (the “Senate proposal”) of H.R. 1, the Tax Cuts and Jobs Act, for consideration by the full Senate Finance Committee (“SFC”) beginning on November 13, 2017. On the same day, the House Committee on Ways and Means approved a modified version of the original House bill. The following material highlights certain important differences between the Senate proposal and the House bill, as amended.

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November 8, 2017

Highlights of the 2017 House Tax Reform Bill


On November 2, 2017, the House Ways and Means Committee (“W&M”) Chairman Kevin Brady (R-TX) released the first draft of its tax reform bill, H.R. 1, titled the Tax Cut and Jobs Act (the “bill”), providing an initial glimpse at what the tax code may look like after its anticipated overhaul by the current Congress. Most of the bill is scheduled to take effect on January 1, but, if negotiations continue into 2018, a new effective date could be set, or provisions could be made retroactive.

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August 15, 2016

Treasury Department Issues Regulations For Early Elections Into New Partnership Audit Regime

On August 4th, the Treasury Department and IRS released temporary and proposed regulations addressing the manner in which partnerships may make an early election to apply the new partnership audit rules created by the Bypartisan Budget Act of 2015 ("BBA") to partnership tax years beginning after November 2, 2015 (the date the BBA was enacted) and before January 1, 2018. For partnerships not making the early election, the new audit regime will generally apply only to tax returns for partnership tax years beginning after December 31, 2017.

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DECEMBER 2015

New Partnership Audit Rules: The Implications for Partnerships and Their Advisors

The Bipartisan Budget Act of 2015 was signed into law on November 2, 2015, and among other provisions, includes new partnership audit rules intended to make it easier for the IRS to collect tax liabilities resulting from partnership audits. The new partnership audit rules fundamentally change the manner in which the IRS conducts audits of partnerships and collects resulting tax liabilities. For more information, read HERE.
AUGUST 2014

Supreme Court's Decision in Clarke: Implications in Light of New IDR Directives

On June 19, the U.S. Supreme Court, in U.S. v. Clarke, addressed when a taxpayer is entitled to an evidentiary hearing at which IRS officials can be examined on their reasons for issuing a summons. The Court held that while a naked allegation of improper purpose is not sufficient to challenge the issuance of a summons, when “the taxpayer can point to specific facts or circumstances plausibly raising an inference of bad faith,” the taxpayer is entitled to an evidentiary hearing on the question of whether the summons was issued for an improper motive.  While the taxpayer is not required to possess direct evidence of bad faith, the taxpayer “must offer some credible evidence supporting his charge.”  

Read more HERE.

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