Category: Partnerships
New Priority Guidance Plan Announced For Limited Partner Exception to SECA
NEW PRIORITY GUIDANCE PLAN ANNOUNCED FOR LIMITED PARTNER EXCEPTION TO SECA For a number of years there has been an ongoing challenge by the IRS of taxpayers claiming limited partner status and exemption from the Self-Employment Contributions Act (SECA) tax. The activity in this area has greatly increased in…
New Jersey PTE/BAIT – Planning for 2022
New Jersey PTE/BAIT – Planning for 2022. Significant revisions to the elective New Jersey Pass-Through Business Alternative Income Tax (PTE/BAIT) are effective for tax years beginning in 2022. The PTE/BAIT, first effective for tax years beginning in 2020, is a work around for the federal $10,000 state and local…
Payment of tax generated by partnership audits at the partnership level – adjusting partnership items
In the 2015 Bi-Partisan Budget Act (“2015 Act”), Congress enacted new centralized audit procedures for entities taxed as partnerships for Federal Income Tax purposes. Because these rules are fairly complex, both for taxpayers and the IRS, they did not become effective until tax years beginning in 2018. The default rule…
New Partnership Level Audit Rules
On November 2, 2015, the President signed into law the Bipartisan Budget Act of 2015 (the “Act”). The Act had numerous provisions, none of which relate to tax except almost the very last provision which now provides new rules for auditing partnerships. Under the Act, absent elections discussed below, all…
Creating a Profits Interest in an S Corporation
Assume Glenn and Art are equal shareholders in Allen, Inc., an S corporation. Bob is employed by Allen and manages one aspect of its business, but not all business is conducted by Allen. All of the parties would agree to give Bob a profits interest as incentive for performance and…