TAXLITIGATOR – Tax Controversy (Civil & Criminal) Report

We are pleased to announce that Robert Horwitz and Cory Stigile will be speaking at the upcoming Strafford Partnership Losses in Excess of Basis: Preparing for the IRS’ Latest Audit Campaign webinar, Friday, September 27, 2024, 10:00 a.m. – 11:50 a.m. (PST).

The IRS has an active partnership campaign to include audits of partners’ deductions of flow-through losses from partnerships. The Service believes that partners are deducting losses in excess of basis rather than suspending these losses when required. The IRS heightened its ability to track partners’ capital by implementing requirements to report negative tax basis capital in 2019, all partners’ capital accounts beginning in 2020, and added disclosures for Section 704(c) built-in gains and losses. The IRS is using data analytics to identify partnerships that are most likely noncompliant.

Practitioners working to meet these added reporting requirements must prepare to defend these positions and the calculations reported. Determining a partner’s outside basis, including whether tax basis capital has been appropriately captured and a partner’s share of liabilities, is complicated. Recent reporting rules have led to the discovery of allocation errors.

Pass-through entity advisers need to prepare for upcoming examinations and know how to handle audits of pass-through entities.

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For more information, please contact Robert Horwitz at horwitz@taxlitigator.com

For more information, please contact Cory Stigile at stigile@taxlitigator.com