IRS Finalizes Disguised Property Sale Rules In Partnerships

Law360, New York (October 4, 2016, 6:11 PM EDT) -- The IRS issued final regulations Tuesday that clarify ambiguities in its treatment of disguised property sales between individuals in partnerships after adopting comments from the public received after the rules were first proposed two years ago.

The rules, initially introduced in January 2014, address how reimbursements for preformation capital expenditures should be treated and how distributions that reimburse partners for the partnership's borrowing should be handled, among other issues.

A partner's property contributions to a partnership are generally tax-free, and a partnership's property contributions to a partner are generally tax-free as well. But if such a transfer can be characterized as...

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