The Internal Revenue Service (IRS) has issued final, temporary and proposed regulations (Final Regulations, the Temporary Regulations and the New Proposed Regulations, respectively, and collectively, the New Regulations) that change the partnership disguised sale rules. See T.D. 9787, 81 Fed. Reg. 69,291 (Oct. 5, 2016); T.D. 9788, 81 Fed. Reg. 69,292 (Oct. 5, 2016).
The Current Regulations on Disguised Sales. Distributions of cash from a partnership to a partner are generally not taxable unless the cash distributed exceeds the partner’s basis in its partnership interest. A partner generally includes its share (as determined under the relevant regulations) of a partnership’s liabilities in the partner’s basis. As a result, partnership liabilities can allow a partner to receive a tax-free cash distribution of the debt proceeds (or other cash), as long as the partner’s basis in the partnership interest (including the partner’s share of the partnership’s debt) exceeds the amount distributed.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
