28 Mar 2023
Oh? The In-Laws Are Visiting? Managing Related-Party Transactions
Learn more about the tax restrictions and limitations on related-party transactions that apply to partnerships and other flow-through entities. Because partnership tax items generally flow through directly to partners/LLC members, and do not remain with the entity, certain transactions at the entity level can result in tax consequences that the Internal Revenue Code never intended. Consequently, the federal tax code appropriately limits and restricts the unintended tax effects of these inappropriate transactions.
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- Pass-Through Entities Taxation
See how flow-through is the word. Many business structures are partnerships and LLCs, or S-corporations, which permit pass-through of losses and income items, to create tax efficiencies for their owners.
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Find all of our pass-through entities’ taxation resources in one place. Before beginning business as a pass-through entity, owners and their counsel will want to review the advantages and disadvantages of doing business as a pass-through entity. Once it’s decided that a pass-through entity is the best entity choice, you’ll form the entity. Then, throughout the life of the entity there will be various tax issues to be aware of and consider.
Practical Guidance Updates
Featuring the latest updates from your Practical Guidance account.
- Tax Key Legal Developments Tracker (Federal)
- Individual Income Tax. IRS issues a fact sheet, noting that money received through "crowdfunding" may be taxable and that taxpayers should understand their obligations and the benefits of good recordkeeping.FS-2022-20.
- Individual Income Tax. Treasury and IRS announce that guidance will be issued on the treatment of certain NFTs as collectibles under I.R.C. Section 401(m)(1), which provides that the acquisition by an IRA of a collectible will be treated as a distribution from the IRA equal to the cost to the IRA of the collectible. Notice 2023-27.
- Individual Income Tax. IRS adjusts the limitation on housing expenses for specific international locations for 2023, for purposes of applying the I.R.C. Section 911housing exclusion. Notice 2023-26.
- Exempt Organizations. IRS announces that it is suspending issuance of several notices generally mailed to tax-exempt or governmental entities in case of delinquent returns. Due to the pandemic, the IRS hasn't processed several million returns filed by individuals and entities. The suspension of notifications will help avoid confusion when a filing is still in process. IRS Exempt Organizations Update.
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