Real Estate & Passthrough Finance Techniques Corner

On Oct 5, 2016, the IRS and the Treasury issued final, temporary and proposed regulations under Code Secs. 704 , 707 and 752 of the Internal Revenue Code of 1986, as amended, relating to the allocation of partnership liabilities and "disguised sales" of property to partnerships. The new Re...

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Bibliographic Details
Published inJournal of Passthrough Entities Vol. 20; no. 2; p. 41
Main Authors Lencz, Norman, Masterson, Brian S, Davidson, Chris S
Format Trade Publication Article
LanguageEnglish
Published Riverwoods CCH INCORPORATED 01.03.2017
Subjects
Fair market value
Guarantees
Internal Revenue Code
Liability
Partnership interest
Pass through entities
Profits
Proposals
Real estate sales
Regulation
Tax basis
Taxpayers
Temporary tax regulations
United States > US
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Summary:On Oct 5, 2016, the IRS and the Treasury issued final, temporary and proposed regulations under Code Secs. 704 , 707 and 752 of the Internal Revenue Code of 1986, as amended, relating to the allocation of partnership liabilities and "disguised sales" of property to partnerships. The new Regulations replace proposed regulations that were issued on Jan 29, 2014. The new Regulations make a number of dramatic changes to the current rules, but the focus of this column is the new rules in the temporary regulations under Code Sec. 707 , which effectively eliminate a partner's ability to use even a commercially reasonable "top dollar" guaranty to avoid a disguised sale on a debt-financed distribution. Accordingly, taxpayers who would like to engage in "leveraged partnership" transactions under the old rules will need to hurry and complete at least one leg of the transaction before the looming deadline is reached.
ISSN:1099-7407