Tax Court Decision on Partnership Distributions of Historic Rehabilitation Tax Credits Could Be ‘Gateway' to More Projects

The Bloomberg BNA Tax Management Weekly State Tax Report filters through current state developments and analyzes those critical to multistate tax planning.

In Gateway Hotel Partners LLC v. Commissioner of Internal Revenue, the U.S. Tax Court recently determined that two transfers of Missouri historic preservation tax credits were partnership distributions but that a portion of a third credit transfer was a taxable sale. In this interview, Philip Karter, lead trial counsel for petitioner Kimberly-Clark Corp., offers valuable insight on various aspects of the decision, including the imposition of a negligence penalty and the IRS's decision to allow one partner to “escape taxation.” He also discusses some important tax planning issues for partners and partnerships.