Tax-oriented investments; an exit strategy for partners: abandonment of partnership interests

Article Abstract:

Tax issues concerning losing partnership investments can be difficult to work out. One solution, however, is for an investor to abandon his partnership interest if the investment has lost its value. Losses resulting from the abandonment are usually tax-deductible if supported by completed transactions and determined by specific acts. The abandonment of partnership interest and the claim for losses under under Section 165 of the Internal Revenue Code is discussed in two cases, Echols versus Comm'r and Citron versus Comm'r. Partners can generally claim ordinary loss in these cases if the partnership has no liability or only holds recourse liabilities.

Real estate agents and managers, Analysis, Cases, Loss deductions, Real estate limited partnerships

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Tax-oriented investments

Article Abstract:

The Internal Revenue Service (IRS) hopes that its planned regulations on the treatment of modifications of debt instruments, produced in the light of the Cottage Savings Association v Comm'r decision, will make it clear when a modification of a debt instrument gives rise to a taxable exchange of the old instrument for a new one. The new ruling will lead to considerable changes in the method of determining when a modification of a debt instrument leads to a deemed exchange of that instrument. It will cover modifications widely made in real estate loan workouts for nontax business reasons.

Interpretation and construction, Tax law

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Tax-oriented investments

Article Abstract:

The Revenue Act of 1987 features provisions governing tax-oriented investments in publicly traded partnerships (PTP). Under the Act, certain PTPs will be regarded as corporations in the application of taxation measures. However, firms in existence on Dec 17, 1987 are exempted under a ten-year grandfather rule. However, the ten-year rule will be nullified when the partnership concerned enters a new business endeavor. Internal Revenue Service has proposed guidelines detailing how a PTP may lose its ten-year exemption.

Taxation, Investments

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