Rules Due on Transfers to Partnerships With Foreign Partners

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Aug. 6 — The IRS plans to issue regulations targeting transactions where taxable gains are shifted through partnership property transferred from a U.S. taxpayer to a foreign partner.

“The Treasury Department and the IRS are aware that certain taxpayers purport to be able to contribute, consistently with sections 704(b), 704(c), and 482, property to a partnership that allocates the income or gain from the contributed property to related foreign partners that are not subject to U.S. tax,” the Internal Revenue Service said Aug. 6 in Notice 2015-54.

“Many of these taxpayers choose a section 704(c) method other than the remedial method and/or use valuation techniques that are inconsistent with the arm's length standard,” it said.