Big Four Ask for Broader Rules Valuing Qualified Financial Assets

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The nation's four largest public accounting firms ask the Treasury Department in a joint letter to expand Section 704 of the Internal Revenue Code to allow certain “lower-tier” securities partnerships to use more flexible rules for accounting for gains and losses of qualified financial assets. The firms—Deloitte Tax LLP, Ernst & Young LLP, KPMG LLP, and PricewaterhouseCoopers LLP—say rules in Section 704(c) and Section 755 should include “any partnership for which separate accounting for revaluation gains and losses from qualified financing assets is impractical or unduly burdensome.” Under current rules, securities partnerships are permitted to aggregate gains and losses from qualified financial assets “using a reasonable approach that is consistent with the purpose of Section 704(c).”