5 February 2018

IRS Issues Additional Partnership Audit Guidance

As part of their ongoing implementation of the partnership audit system created by 2015's Balanced Budget Act, the IRS has again released guidance on how partnerships can pay adjustments after an audit.

 

On February, 1 the IRS proposed rules detailing how to re-align partners’ capital accounts after an adjustment, if the partnership elects to pay the liability at the entity level. The goal is to find a way to put partners in the same place after an adjustment that they would have been if the tax had been paid correctly in the first place.

The regulations create a concept called a notional item that is allocated to partners and adjusts their capital accounts based on the amount of tax the partnership paid on their behalf. The rules instruct partnerships on how to allocate those notional items to partners and how to deal with scenarios when partners have sold their interest prior to the conclusion of an audit. The new partner who bought their interest will get the old partner's basis, with an exception for cases where the old-year partner was a tax-exempt partner.

The proposed rules, however, could create serious problems for master limited partnerships (MLPs), whose units trade on public markets, where new partners don't know from whom they are buying. Additionally, MLP units have to be treated the same so the MLP can't adjust the capital account of one unit without making adjustments on all interests.

Additionally, the IRS released regulations in December that specify that partnerships can push tax adjustments out to the ultimate partner in a tiered structure. Both the entity level tax and the push-out will require the partnership to collect information from partners and send data back out. As a result, many partnerships will simply opt for the push-out option so that they don't also have the responsibility of cutting the check to the IRS.

Publicly traded partnerships (e.g. MLPs), however, may often decide to pay the adjustment at the entity level because pushing it out to the partners would create a big inconvenience for investors. As a result, the IRS' February guidance could create problems for MLPs: the mechanism to adjust a partner’s basis after a tax adjustment paid at the partnership level (notional item) will apply imperfectly to the partnerships most likely to use it (MLPs).

Blog TopicInfo
Print
«November 2024»
MonTueWedThuFriSatSun
282930

Grant Due: FY 2024 Vehicle Technologies Office Batteries Funding

FY 2024 Vehicle Technologies Office Batteries Funding

WHAT DOES IT FUND? This program advances research, development, demonstration, and deployment (RD&D) in several areas critical to achieving net-zero greenhouse gas (GHG) emissions by 2050, including: development of innovative battery chemistries and component materials, reduction of cascading battery fires, and battery electrode, cell, and pack manufacturing cost reduction. Click here for more information.

WHO'S ELIGIBLE? State and local governments, nonprofits, for-profits, institutions of higher education, and Indian Tribes 

TOTAL FUNDING AMOUNT? $42.9 million

WHEN'S IT DUE? October 30, 2024 (Full Application) 

Read more
311

Grant Due: FY 2024 Healthy Communities Grant Program (Region 1, New England)

FY 2024 Healthy Communities Grant Program (Region 1, New England)

WHAT DOES IT FUND? The purpose of this program is to fund direct work with communities to reduce environmental risks, protect and improve human health and improve quality of life. Click here for more information.

WHO'S ELIGIBLE? State and local governments, nonprofits, federally recognized Indian Tribal governments, K-12 schools or school districts, all which do not need to be within EPA Region 1 but must propose projects within that area

TOTAL FUNDING AMOUNT? $500,000

WHEN'S IT DUE? November 1, 2024

Read more
23
4567

Grant Due: FY 2024 Offshore Wind National and Regional Research and Development

FY 2024 Offshore Wind National and Regional Research and Development

WHAT DOES IT FUND? The purpose of this program is to apply basic research, education/outreach, and feasibility study activities to be funded under this program will support the government-wide approach to the climate crisis by driving the innovation that can lead to the deployment of clean energy technologies. Click here for more information.

WHO'S ELIGIBLE? State and local governments, institutions of higher education, nonprofits, forprofit entities, and federally recognized Indian Tribes 

TOTAL FUNDING AMOUNT? $48.6 million

WHEN'S IT DUE? November 7, 2024 (Full Applications)

Read more
8910
11121314

Grant Due: FY 2025 Service Area Competition (Third Solicitation)

FY 2025 Service Area Competition (Third Solicitation)

WHAT DOES IT FUND? This program ensures continuity of care in the communities and populations currently served by the Health Center Program. Click here for more information.

WHO'S ELIGIBLE? Special district governments, city or township governments, state governments, county governments, Native American tribal governments and organizations, urban Indian organizations, nonprofit organizations, and independent school districts

TOTAL FUNDING AMOUNT? $244.4 million

WHEN'S IT DUE? November 14, 2024 (EHBs)

Read more
151617
18192021

Grant Due: FY 2024 Continuum of Care (CoC) Builds

FY 2024 Continuum of Care (CoC) Builds

WHAT DOES IT FUND? The purpose of this program is to target efforts within Continuum of Care (CoC) geographic areas to address and reduce persons experiencing homelessness by adding new units of permanent supportive housing (PSH) through new construction, acquisition, or rehabilitation through one-time awards under this program. Click here for more information.

WHO'S ELIGIBLE? State governments, county governments, city or township governments, special district governments, federally recognized Native American tribal governments, public housing authorities (PHAs)/Indian housing authorities, Native American tribal organizations (other than federally recognized tribal governments), and nonprofits having a 501(c)(3) status with the IRS, other than institutions of higher education, and faith-based organizations

TOTAL FUNDING AMOUNT? $175 million

WHEN'S IT DUE? November 21, 2024

Read more
222324
2526272829301
2345678

US Congressional Calendar

27 November 2023

TFG Presents 2024 Congressional Calendar

The Ferguson Group (TFG) compiled a 2024 Congressional Calendar with session and recess dates for the U.S. House of Representatives and U.S. Senate 118th congressional session. 

Latest TFG News

Kristen H. Long Promoted to Grants Principal at TFG 24 July 2024

Kristen H. Long Promoted to Grants Principal at TFG

TFG strengthens leadership team amidst explosive growth in grants division.

COLUMBIA, S.C. – The TFG Grants Division is pleased to announce the promotion of Kristen H. Long to Grants Principal. Kristen has been an integral part of the TFG Grants Division since 2022.

Meet a Team Member

Latest Coronavirus Updates