By: Amanda Wilson
Last week, President Obama signed into law the Bipartisan Budget Act of 2015. As I mentioned in a prior post (found here), the budget bill contained a proposal to revamp how partnerships are audited. Specifically, TEFRA (the 1982 Tax Equity and Fiscal Responsibility Act) is out. The new partnership audit rules go into effect for partnership returns filed for partnership taxable years beginning after December 31, 2017.
By: Amanda Wilson
The budget bill introduced yesterday includes a proposal to revamp/streamline how partnerships are audited. Specifically, it would repeal the much maligned TEFRA (1982 Tax Equity and Fiscal Responsibility Act) rules.
By: Amanda Wilson
Because of the flexibility and tax benefits that tax partnerships provide, many small businesses and family partnerships use tax partnerships. For tax purposes, a partnership can be in the form of a general partnership, limited partnership, limited liability company or limited liability limited partnership. While these forms offer great tax advantages, they can also result in unexpected surprises and traps for the unwary when a partnership interest is bought or sold.
By: Amanda Wilson
When deciding how to form their new business, small business owners are often encouraged to organize as an S corporation because of self-employment tax savings. This recommendation is because the IRS does not recognize that a partner in a partnership can also be an employee. As a result, the IRS takes the position that all of the partner’s income from the partnership should be subject to self-employment taxes, instead of just the amount that reflects a reasonable salary. In contrast, an owner of an S corporation can clearly be treated as both an owner and an employee, resulting in self-employment tax savings.
By: Amanda Wilson
April 15th is usually greeted with dread as tax day. However, April 15th also offers an important tax planning opportunity for partners in partnerships (including limited liability companies that are treated as partnerships for federal income tax purposes). The tax rules allow partners to amend their partnership agreement retroactively to January 1 of the prior year if the amendment is in place by April 15th. If your business has a partnership, this might be a great opportunity for you. You should take a moment to look at how your partnership is allocating taxable income and losses to the partners in 2013 and make changes if a different allocation would work better for your partnership. Act fast, though, because unlike the due date for filing your return, this deadline cannot be extended.
