New Year Insights: Navigating Changes in Partnerships and LLCs Interests

As we step into the new year, it's a great time to reflect on any changes in partnership interests that took place in 2024. The sale or exchange of a partnership interest is only one way in which partnership interests can change. For example, if a partner, such as an attorney in a law firm, leaves their partnership, either the partner can sell their interest back to the partnership or the partnership can liquidate that partner's interest. The tax treatment of these methods can vary for both the selling and remaining partners. It's essential to review these transactions to ensure compliance and optimize tax outcomes. Additionally, stay informed about any new regulations or tax laws that could affect partnership structures, and plan accordingly for a successful year ahead.

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Practical Guidance Updates 
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• Tax Key Legal Developments Tracker (Federal) (Current)—keep up to date with key legal developments!
  • Business Entities. IRS and Treasury Department issue final regulations relating to recourse liabilities of a partnership and special rules for related persons and affecting partners and partnerships. Recourse Partnership Liabilities and Related Party Rules, T.D. 10014, 89 Fed. Reg. 95108 (Dec. 2, 2024).
  • International Tax. IRS announces that the United States and Norway have entered into a Competent Authority Arrangement under paragraph 2 of Article 27 of the Convention between the United States and the Kingdom of Norway for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion. Announcement 2024-42; 2024-52 I.R.B. 1.
  • International Tax. IRS and Treasury Department issue proposed regulations regarding previously taxed earnings and profits of foreign corporations and related basis adjustments and affecting foreign corporations with previously taxed earnings and profits and their shareholders. Previously Taxed Earnings and Profits and Related Basis Adjustments, 89 Fed. Reg. 95362 (Dec. 2, 2024).
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