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Partnership Rules Flout Long-Held Principles, Tax Pros Say

Law360, Los Angeles (February 7, 2018, 2:39 PM EST) -- The IRS recently proposed regulations on adjusting tax attributes under the new centralized partnership audit regime, and tax practitioners say the rules could fly in the face of traditional partnership tax principles.

Under the proposed regulations released last week, when the IRS determines that a partnership owes tax, partners and partnerships will make adjustments to tax attributes such as outside basis and capital accounts using a novel mechanism known as a notional item to allocate gains and losses. But the adjustments are made only in the...
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