Proposed regulations eliminate partnership interest transfer distortions but leave unanswered questions

Article Abstract:

IRS proposed regulations under IRC section 755 provide guidance for allocations of partnership property basis adjustments under section 743(b) after transfers of partnership interests where section 754 elections are effective. The regulations are an improvement over the regulations which they replace which have resulted in distortions. Final regulations should include coverage of some issues which are not addressed in these noncomprehensive regulations.

Accounting and auditing

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Partnership's charitable contribution provides deduction to partners

Article Abstract:

The IRS in Letter Ruling 9747040 allowed partners to individually claim charitable deductions for the partnership's contribution of property to a qualified tax-exempt charitable organization. Such treatment is not possible for IRC Subchapter S corporation shareholders. Partners wishing to take advantage of the ruling should be mindful of the inurement and unrelated business taxable income rules which apply to tax-exempt organizations.

Charitable contributions, Charitable donations

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Proposed regulations coordinate partnership interest transfers under Code secs. 743(b) and 704(c): caveat emptor

Article Abstract:

The IRS issued in Jan 1998 proposed regulations providing rules for partnership basis adjustments where IRC section 754 elections are attached to transferred partnership interests. IRC section 743(b)'s basis adjustment rules which apply to transferees should be examined in conjunction with depreciation deduction section 704(c). Reference to examples showing problems and planning strategies may be useful.

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