Final regulations concerning liabilities join substantial economic effect rules

Article Abstract:

The IRS issued final rules on partnership liabilities under Section 752 and 704(b) which replace temporary regulations issued earlier. Section 752 defines how the liabilities of the partnership are to be divided among the individual partners. Section 704(b) governs allocations which do not have significant economic impact because they are due to nonrecourse liabilities. The new regulations, which complement the substantial economic effect rules, give taxpayers enough flexibility and protect them from abusive allocations.

Finance, taxation, & monetary policy, United States. Internal Revenue Service

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Recent developments

Article Abstract:

A survey describing recent developments involving general and limited partnership cases and law applications is presented. The limited partnership cases involve transfer of limited partnership interest pursuant to divorce degree, liability of limited partners to creditors, effect of breach of fiduciary duty by a general partner on debt dischargeability in bankruptcy court, fiduciary duty of land trustee to question authority of general partner and allocation of legal fees from pre-dissolution work in progress.

Cases, Limited partnership, Limited partnerships

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International developments

Article Abstract:

The Internal Revenue Service has made a ruling on the taxation of partnership interests of foreigners in joint ventures with American partners. The ruling is called Revenue Ruling 91-32 and it will presumably cause foreign investments to be coursed through US rather than foreign subsidiaries. The ruling's effects on tax treaty exemptions are discussed. It is suggested that Revenue Ruling 91-32 may be difficult to implement due to deficiencies in reporting regulations.

Foreign investments

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