Let’s Partner on That. Understanding Tax Aspects of Partnerships and other Flow-through Entities

Because partnership tax items generally flow directly to partners/LLC members, and do not remain with the entity, certain transactions at the entity level can result in tax consequences that the Internal Revenue Code never intended. Consequently, the federal tax code appropriately limits and restricts the unintended tax effects of these inappropriate transactions.

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  • Business Entities. IRS holds that if one or more of a state’s allocations, under section 305 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020, to qualified disaster zones in 2021 or 2022, are returned after 2022, then the returned housing credit dollar amounts are part of the overall Returned Credit Component of a state’s housing credit ceiling in the year of return, and, as such, reallocations of these returned amounts are not restricted to projects located in qualified disaster zones.  Rul. 2024-5.
  • Business Expenses. IRS issues a nonbinding Generic Legal Advice Memorandum (GLAM) providing advice on I.R.C. Section 482 in determining the arm’s-length rate of interest on an intragroup loan to a controlled borrower and so-called implicit parental support. GLAM AM 2023-008.
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