Page 218 - The TEFRA Partnership Audit Rules Repeal:

ALI CLE Live Video Webcast / “The TEFRA Partnership Audit Rules Repeal: Partnership and Partner Impacts” June 7, 2016, Jerald David August and Terence Floyd Cuff
Some issues concerning “cease to exist” include:
 The partnership having substantial assets and operations, but being insolvent.
 The partnership having assets, but having liabilities equal or greater than the assets.
 The partnership having substantially reduced business activities, but having assets and some material business activities.
 The partnership having minimal business activities and minimal assets, but some business activities and assets.
 The partnership having no business activity but some assets.
 The partnership becoming a disregarded entity.
 The partnership terminating for tax purposes, but continuing as an operational entity.
 The partnership merging with another entity.
 The partnership dividing into two entities.
 The interests in the partnership have been transferred to new partners without terminating the partnership under Section 708.
 The partnership has minimal business activity which has been prolonged to avoid partner liability for the underpayment.
The term “former partners” may refer to the partners at the time at which the partnership imputed underpayment. “Former partners” might be partners during the reviewed year. “Former partners” might be all partners between the reviewed year and the cessation. The partners may arrange transfers of partnership interest so that the partners at the time of cessation will be shell entities. The regulations may address this device.
The New York State Bar Association, Tax Section, Report No. 1347, “Report on the Partnership Audit Rules of the Bipartisan Budget Act of 2015” (May 25, 2016) advises:
We believe that the most appropriate interpretation of section 6241(7) is that “former partners” means the reviewed year partners and
© Terence Floyd Cuff and Jerald David August, 2016
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