![]() Both partnerships had the same majority partner (which appears to have been Partner A, although it is not entirely clear). Partnership X and Partnership Y engaged in a transaction treated as a partnership merger under Treas. Partners A and Q were partners in Partnership X. The facts in the memorandum are redacted, but certain aspects of the transactions are described in the analysis. Section 1.743-1(d)(1)(iii) for purposes of the calculation of a partner's previously taxed capital. The IRS concluded that deferred COD income should not be treated as "tax gain" under Treas. Section 1.752-1(f) with the calculation of a IRC Section 743(b) adjustment and the treatment of deferred cancellation of indebtedness (COD) income under IRC Section 108(i). Notably, the IRS considered the interaction of the netting rule of Treas. In partially redacted technical advice, the IRS advised on how to determine the amount of a mandatory IRC Section 743(b) adjustment in the context of an assets-over partnership merger. Deemed distribution of a partnership interest in an assets-over merger requires downward basis adjustment deferred COD income not considered tax gain that can attract IRC Section 743(b) adjustment
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