New Audit Rule Limits Tax Discharges By Partnerships

Law360, New York (August 5, 2016, 8:52 PM EDT) -- A new rule forcing partnerships to declare they won’t voluntarily file for bankruptcy as a prerequisite for electing a revamped tax audit regime is being billed by experts as an unexpected move by the Internal Revenue Service to prevent the new regime from being abused to avoid tax liabilities.

The agency released the eagerly anticipated rules on Thursday after Congress in November signed the new audit regime into law as part of the Bipartisan Budget Act of 2015. At its core, the new regime makes tax adjustments at the partnership level instead of at the level of the individual partners, and...

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