IRS Targets Deduction of Unamortized Costs in Termination of Partnership

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The Internal Revenue Service is cracking down on deductions of unamortized startup and organizational expenses in the event of a technical termination of a partnership.
In proposed rules (REG-126285-12) released Dec. 6, the IRS and the Treasury Department stated that such deductions are “contrary to the congressional intent underlying sections 195, 708, and 709” of the tax code.
Some taxpayers have been taking the position that a technical termination under Section 708(b)(1)(B) entitles a partnership to deduct unamortized startup expenses and organizational expenses to the extent provided under Section 165, the IRS said.

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